License Agreement - SALIX PHARMACEUTICALS - 5-10-2011

Exhibit 10.80
Portions of this document marked [*] are requested to be treated confidentially.
EXECUTION VERSION
LICENSE AGREEMENT
by and between
SALIX PHARMACEUTICALS, INC.
and
PROGENICS PHARMACEUTICALS, INC.
PROGENICS PHARMACEUTICALS NEVADA, INC.
and
EXCELSIOR LIFE SCIENCES IRELAND LIMITED
Dated as of 3 February 2011
TABLE OF CONTENTS
Page
1. DEFINITIONS 6
2. LICENSE GRANTS AND RELATED MATTERS 27
2.1. License from Progenics to Salix 27
2.2. Sublicenses 27
2.3. Direct Licenses to Affiliates 28
2.4. Certain Matters Relating to the University of Chicago 29
2.5. License from Salix to Progenics 29
2.6. Enforcement of Non-Assertion of Rights Covenants 29
2.7. Non-Assertion of Progenics’s Rights; Non-Exclusive License Grant; Non-Assertion by Salix 30
2.8. Fully Paid-Up, Royalty Free License 30
2.9. Know-How Disclosure and Transfer 30
2.10. Costs of Assistance 31
2.11. No Implied Rights 31
2.12. Japan 31
3. GOVERNANCE OF COLLABORATION 33
3.1. Joint Committees 33
3.2. Membership 34
3.3. Committee Meetings 35
3.4. Committee Officers; Minutes 35
3.5. Decision-Making 35
3.6. Sunset Provision 36
3.7. Oversight by Senior Executives 36
4. DEVELOPMENT 36
4.1. Development Plan 36
4.2. Development Responsibilities of Salix 37
4.3. Records 38
4.4. Reports on Development 38
4.5. Transfer of Data 39
4.6. Ongoing Development Work 39
5. COMMERCIALIZATION 41
5.1. Salix’s Commercialization Responsibilities and Efforts 41
5.2. Transition; Supply 42
5.3. Marketing Materials and Corporate Branding 43
5.4. Sharing of Information 43
5.5. Unauthorized Sales 43
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6. PAYMENTS BY SALIX TO PROGENICS 44
6.1. Upfront License Fee Payment 44
6.2. Development Milestone Payments 45
6.3. Commercialization Milestone Payments 45
6.4. Ex-U.S. Sublicenses and Sales 46
6.5. Royalty Payments 46
6.6. Reports and Payments 48
6.7. Diagnostic or Veterinary Products 50
7. INTELLECTUAL PROPERTY 51
7.1. Ownership of Intellectual Property 51
7.2. Patent Prosecution 51
7.3. Enforcement of Patent Rights 56
7.4. Infringement and Third Party Licenses 60
7.5. Trademarks 61
8. CONFIDENTIALITY 62
8.1. Product Information 62
8.2. Confidentiality 63
8.3. Authorized Disclosure 64
8.4. SEC Filings and Other Disclosures 64
8.5. Public Announcements; Publications 65
9. REPRESENTATIONS AND WARRANTIES 66
9.1. Representations and Warranties of Each Expanded Party 66
9.2. Additional Representations and Warranties of Progenics 67
9.3. Survival 77
9.4. Progenics Party Covenants 77
10. TERM AND TERMINATION 79
10.1. Term 79
10.2. Termination for Cause 79
10.3. Termination for Insolvency or Bankruptcy 80
10.4. Termination by Salix at Its Discretion 80
10.5. Termination of Licenses; Accrued Obligations 80
10.6. Effects of Termination or Expiration 81
10.7. Sale of Inventory 83
10.8. Effect of Termination on Sublicenses Granted by Salix 83
10.9. Milestone Payments; Royalties 84
10.10. Surviving Provisions 84
10.11. Bankruptcy-Related Matters 84
11. INDEMNIFICATION AND INSURANCE 86
11.1. Indemnification by Salix 86
11.2. Indemnification by Progenics 86
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11.3. Procedure 86
11.4. Insurance 87
12. REGULATORY MATTERS, PRODUCT SAFETY ISSUES, PRODUCT RECALLS 88
12.1. Regulatory Matters 88
12.2. Rights of Cross-Reference 88
12.3. Communications with Regulatory Authorities 89
12.4. Regulatory Audits 90
12.5. Ownership of Regulatory Documentation, Registrational Filings and Regulatory Approvals; Transfer of
Registrational Filings and Regulatory Approvals 91
12.6.
Medical and Customer Inquiries 91
12.7.
Safety Agreement 91
12.8.
Product Recalls 92
13. MISCELLANEOUS 92
13.1. Force Majeure 92
13.2. Agency 93
13.3. Choice of Law 93
13.4. Notices 93
13.5. Severability 95
13.6. Entire Agreement 95
13.7. Modifications; No Waiver 95
13.8. Cumulative Remedies 95
13.9. Assignment; Binding Effect 96
13.10. Change in Control of Progenics; Acquisition 96
13.11. Counterparts 97
13.12. Executive Mediation 97
13.13. No Consequential Damages 98
13.14. Interpretation 98
13.15. Representation by Counsel 98
13.16. Further Assurances 98
13.17. Jurisdiction; Venue; Service 99
13.18. Specific Enforcement 99
13.19. Export Control 99
13.20. Performance by Third Party Contractors and Affiliates 100
13.21. No Benefit to Third Parties 100
13.22. Effect of Termination of the UR Labs-Progenics Agreement 100
13.23. Effect of Termination of the [*] Agreement 102
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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SCHEDULES
Schedule 1.32 Chemical drawing of Compound
Schedule 1.135 Salix COGs
Schedule 1.139 Salix Competitors
Schedule 4.1 Initial Development Outline
Schedule 4.6(d) Major supply and other contracts
Schedule 5.1(a) Initial Commercialization Outline
Schedule [*] [*]
Schedule [*] [*]
Schedule 9.2(a)(i) Licensed Patent Rights
Schedule 9.2(a)(ii) Progenics Third Party Agreements
Schedule 9.2(b)(i) Wyeth Collaboration Patent Rights
Schedule 9.2(b)(ii) Wyeth Collaboration Joint Patent Rights
Schedule 9.2(c)(i) Exceptions to ownership of Patent Rights
Schedule 9.2(c)(ii) Exceptions to ownership of interest in Joint Patent Rights
Schedule 9.2(d) Exceptions as to inventors
Schedule 9.2(e) Exceptions as to prior art
Schedule 9.2(f) Exceptions as to interest in Progenics Know-How
Schedule 9.2(i) Exceptions as to freedom to operate
Schedule 9.2(j)(i) Exceptions as to validity and enforceability of Progenics Patent Rights
Schedule 9.2(j)(ii) Exceptions as to misappropriation
Schedule 9.2(j)(iii) Exceptions as to claims of invalidity or unenforceability of Licensed Patent Rights
Schedule 9.2(m) Disclosures in respect of RELISTOR marks
Schedule 9.2(o) Adverse Information
Schedule 9.2(p) Studies
Schedule 9.2(r)(i) Regulatory Approvals
Schedule 9.2(s) Promotional Materials
RELATED AGREEMENTS
[*]
[*]
2010 Agreement Related to Progenics’s MNTX In-License, among the Expanded Parties and the University of Chicago and
ARCH Development Corporation
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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This LICENSE AGREEMENT (this “ Agreement ”) is made and entered into as of 3 February 2011 (the “ Effective Date ”),
by and between Salix Pharmaceuticals, Inc., a corporation existing under the laws of California and having a place of business at
1700 Perimeter Park Drive, Morrisville, NC 27560 (“ Salix ”), and Progenics Pharmaceuticals, Inc., a corporation organized and
existing under the laws of the State of Delaware and having a principal place of business at 777 Old Saw Mill River Road,
Tarrytown, NY 10591 (“ Progenics ”), Progenics Pharmaceuticals Nevada, Inc., a corporation organized and existing under the
laws of the State of Nevada and having a principal place of business at 777 Old Saw Mill River Road, Tarrytown, NY 10591, USA
and a wholly-owned subsidiary of Progenics (“ ProNev ”), and Excelsior Life Sciences Ireland Limited, a corporation organized
and existing under the laws of Ireland and having a principal place of business at 25/28 North Wall Quay, Dublin 1 Ireland and a
wholly-owned subsidiary of Progenics (“ Excelsior ,” and together with Progenics and ProNev, the “ Progenics Parties ”). Salix
and Progenics may each be referred to herein individually as a “ Party ” and, collectively, as the “ Parties .” Salix and the
Progenics Parties may each be referred to herein individually as an “ Expanded Party ” and, collectively, as the “ Expanded
Parties .”
BACKGROUND
A. Salix is in the business of discovering, developing, manufacturing and marketing human pharmaceutical products.
B. Progenics is a biopharmaceutical company focusing on the development and commercialization of innovative
therapeutic products. Progenics has developed [*]-methylnaltrexone (“[ * ] -MNTX ”) for the treatment of opioid-induced
constipation associated with advanced illness and is developing [*]-MNTX for other indications and in other formulations.
C. The Progenics Parties own or have rights under certain patents, patent applications, other valuable technology and
know-how relating to [*]-MNTX and other methylnaltrexone molecules.
D. Progenics and ProNev entered into a License and Co-Development Agreement with Wyeth, acting through Wyeth
Pharmaceuticals Division, Wyeth Whitehall Pharmaceuticals, Inc. and Wyeth Ayerst Lederle, Inc. (collectively, “ Wyeth ”),
dated as of 23 December 2005 (the “ Wyeth Agreement ”), under which Progenics granted Wyeth a worldwide license to develop
and commercialize [*]-MNTX.
E. The parties to the Wyeth Agreement entered into a Partial Termination and License Agreement, dated 16 October 2008
(the “ Partial Termination Agreement ”), confirming the termination with respect to Japan of the rights granted to Wyeth under
the Wyeth Agreement.
F. Progenics entered into a License Agreement with Ono Pharmaceutical Co., Ltd. (“ Ono ”), dated as of 16 October 2008
(the “ Ono Agreement ”), under which Progenics granted Ono a license to develop and commercialize the subcutaneous
formulation of [*]-MNTX for the Japanese market and an option to develop and commercialize additional formulations of [*]-
MNTX.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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G. Wyeth and certain of its affiliates and Progenics, ProNev and their affiliate Excelsior entered into a Termination and
Transition Agreement, effective 1 October 2009, as amended (the “ Termination Agreement ”), providing for the termination of
the Wyeth Agreement and the Partial Termination Agreement.
H. Salix and Progenics wish to collaborate regarding the further development and commercialization of methylnaltrexone
worldwide except, unless and until Japan is included in the Territory hereunder, for Japan, and Progenics wishes to grant to
Salix, and Salix wishes to receive from Progenics, a license to so develop and commercialize methylnaltrexone.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth below and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the Expanded Parties hereby agree as follows:
1. DEFINITIONS
Capitalized terms used in this Agreement, including its Exhibits and/or Schedules, and not otherwise defined herein shall
have the following meanings:
1.1. “ 1985 Agreement ” means the Option and License Agreement entered into by UR Labs and the University of Chicago
and dated as of 8 May 1985, as amended.
1.2. “[ *] ” has the meaning set forth in Section [*].
1.3. “ [ * ]” has the meaning set forth in Section [*].
1.4. “ [ *] ” has the meaning set forth in Section [*].
1.5. “[ * ]” means, in respect of the [*] or the [*], that:
(a) the [*] required for [*] does not contain any [*]; and, in addition,
(b) [*] is required by the [*].
1.6. “ Acquisition ,” with respect to a Party, means a merger, acquisition (whether of all of the stock or all or substantially
all of the assets of a Person or any operating or business division of a Person) or similar transaction by or with the Party, other
than a Change in Control of the Party.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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1.7. “ Action Party ” has the meaning set forth in Section 7.3(d).
1.8. “ Adverse Events ” has the meaning set forth in Section 9.2(o).
1.9. “ Affiliate ” means, in respect of any Person, any other Person that, directly controls or is controlled by, or is under
common control with the first Person. For purposes of this definition , “control” and, with correlative meanings, the terms
“controlled by” and “under common control with” means (a) the possession, directly or indirectly, of the power to direct, or
cause the direction of, the management or policies, whether through the ownership of voting securities, by contract relating to
voting rights or corporate governance, or otherwise, or (b) ownership, directly or indirectly, of fifty percent (50%) or more of the
shares of stock entitled to vote for the election of directors, in the case of a corporation, or fifty percent (50%) or more of the
voting securities, or other voting ownership interests, in the case of any limited liability company or other type of legal entity.
1.10. “ Agreement ” has the meaning set forth in the first paragraph hereof.
1.11. “ API ” means active pharmaceutical ingredient.
1.12. “ Applicable Law ” means applicable national, federal, state, provincial, local or other laws, statutes, rules,
regulations and guidances, including rules, regulations, guidances, guidelines or other requirements of Regulatory Authorities
or other governmental authorities, as in effect from time to time in any jurisdiction.
1.13. “ Applicable Net Sales Percentage ” has the meaning set forth in Section 6.5(a).
1.14. “Board of Directors ” has the meaning set forth in the definition of “Change in Control.”
1.15. “ Business Day ” means a day other than a Saturday or a Sunday on which banks in New York, New York are open
for the conduct of regular banking business.
1.16. “ Calendar Year ” means each successive period of twelve (12) months commencing on January 1 and ending on
December 31.
1.17. “ cGCP ” means current good clinical practices as stated in Applicable Law, including Directive 2001/20/EC, Directive
2005/28/EC, and 21 C.F.R. Parts 50, 56 and 312 et seq., each as amended from time to time and all FDA and ICH guidelines related
thereto, including the ICH Consolidated Guidelines on Good Clinical Practices.
1.18. “ cGLP ” means current good laboratory practices as stated in Applicable Law, including Directive 2004/10/EC and 21
C.F.R. Part 58 et seq., each as amended from time to time and all FDA and Council of the Organization for Economic Cooperation
and Development (OECD) guidelines related thereto.
1.19. “ cGMP ” means current good manufacturing practices as stated in Applicable Law, including 21 C.F.R. Part 210 and
211 and Directive 2003/94/EEC, each as amended from time to time and all FDA, European Commission and ICH guidelines
related thereto.
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1.20. “ Change in Control ”, with respect to a Party, shall be deemed to have occurred if any of the following occurs after
the Effective Date:
(i) any “person” or “group” (as such terms are defined below) (a) is or becomes the “beneficial owner” (as
defined below), directly or indirectly, of shares of capital stock or other interests (including partnership interests) of such Party
then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of the
directors, managers or similar supervisory positions (“ Voting Stock ”) of such Party representing fifty percent (50%) or more of
the total voting power of all outstanding classes of Voting Stock of such Party or (b) has the power, directly or indirectly, to
elect a majority of the members of the Party’s board of directors or similar governing body (“ Board of Directors ”); or
(ii) such Party enters into a merger, consolidation or similar transaction with another Person (whether or not
such Party is the surviving entity) and as a result of such merger, consolidation or similar transaction (a) the members of the
Board of Directors of such Party immediately prior to such transaction constitute less than a majority of the members of the
Board of Directors of such Party or such surviving Person immediately following such transaction or (b) the Persons that
beneficially owned, directly or indirectly, the shares of Voting Stock of such Party immediately prior to such transaction cease
to beneficially own, directly or indirectly, shares of Voting Stock of such Party representing at least a majority of the total voting
power of all outstanding classes of Voting Stock of the surviving Person in substantially the same proportions as their
ownership of Voting Stock of such Party immediately prior to such transaction; or
(iii) such Party sells or transfers to any Third Party, in one or more related transactions, properties or assets
representing all or substantially all of such Party’s consolidated total assets; or
(iv) the holders of capital stock of such Party approve a plan or proposal for the liquidation or dissolution of
such Party.
For the purpose of this definition of Change in Control, (a) “person” and “group” have the meanings given such terms under
Section 13(d) and 14(d) of the United States Securities Exchange Act of 1934 and the term “group” includes any group acting
for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the said Act, (b) a
“beneficial owner” shall be determined in accordance with Rule 13d-3 under the aforesaid Act, and (c) the terms “beneficially
owned” and “beneficially own” shall have meanings correlative to that of “beneficial owner.”
1.21. “Chronic Pain Product” means a Product for use in the Human Field for the treatment of opioid-induced
constipation arising from the treatment of chronic pain associated with one or more non-cancer diseases or conditions.
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1.22. “ [ * ]” has the meaning set forth in Section [*].
1.23. “ Claim ” means any claim, action, cause of action, chose in action, or suit (in contract or tort or otherwise), litigation,
arbitration, investigation, opposition, hearing, complaint, demand, notice or proceeding to, from, by or before any arbitrator,
court, administrative organization, or other governmental authority or other Person.
1.24. “Clinical Data” means all information relating to a drug product made, collected or otherwise generated in the
performance of or in connection with any clinical trials (including any Phase 4 Clinical Trials), including any data, reports and
results relating thereto.
1.25. “ CMC” means Chemistry, Manufacturing and Controls information as required to be submitted under Section 505 of
the FD&C Act and 21 C.F.R. 214.
1.26. “ Collaboration ” means the Development, Commercialization and other activities of Salix and Progenics under this
Agreement in respect of Products in the Field in or for the Territory.
1.27. “ Commercialization ” means, in respect of a particular compound or product and a particular country, all activities
related to the commercial exploitation of the compound or product in the country, including the making, having made, supply,
use, importation, exportation, marketing, promotion, distribution, pre-launch, launch, offering for sale or sale of the compound or
product in the country. When used as a verb, “Commercialize” or “Commercializing” means to engage in Commercialization.
1.28. “ Commercialization Milestone Payments ” has the meaning set forth in Section 6.3.
1.29. “ Commercialization Plan ” means a comprehensive plan prepared by Salix (as amended from time to time in
accordance with this Agreement) that specifies the efforts Salix, its Affiliates and Sublicensees intend to use in respect of
Commercialization of Products in the Field in the Territory, which plan shall be consistent with the Initial Commercialization
Outline and with Salix’s obligations under Section 5.1 and shall include (with reasonable detail) a description of, and [*] and [*]
for, all Product-related [*] activities (including activities [*] and other arrangements affecting the Commercialization of
Products), including [*] activities, the [*] in each Major Market Country, Product-related [*] in each Major Market Country,
Product-related [*] activities to be performed by [*] in furtherance of Commercialization of Products in the Field in the Territory,
and the general [*] in each Major Market Country.
1.30. “ Commercially Reasonable Efforts ” means efforts and resources normally used by the Party required to use such
efforts and resources for a product, proposed product or technology owned by it or to which it has rights, which is of similar
commercial potential at a similar stage in its development or product life to the product in question, (a) taking into account
issues of: [*].
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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1.31. “ Committee ” and “ Committees ” have the meaning set forth in Section 3.1.
1.32. “ Compound ” means methylnaltrexone (MNTX), which is chemically defined as [*]. A chemical drawing of the
Compound is attached as Schedule 1.32 .
1.33. “ Confidential Information ” means all information disclosed by one Expanded Party to another Expanded Party
(other than solely by virtue of such information being disclosed between the Progenics Parties), whether prior to the Effective
Date or during the Term, that either is identified as confidential or is information that is of a nature that is customarily regarded
as confidential within the pharmaceutical industry, whether disclosed in electronic, tangible, oral or visual form. The terms and
existence of this Agreement shall constitute Confidential Information of each Expanded Party, the restrictions on disclosure of
which imposed hereunder shall be subject to Section 8.4.
1.34. “ Control ” means, with respect to any item of Know-How, Regulatory Documentation, Patent Rights, or trademark or
other intellectual property right, possession of the right, whether directly or indirectly, whether existing as of the Effective Date
or thereafter acquired, and whether by ownership, license or otherwise (other than by operation of any license and other grants
hereunder), to assign or grant a license, sublicense or other right to or under such Know-How, Regulatory Documentation,
Patent Rights, or trademark or other intellectual property right as provided for herein without violating the terms of any
agreement or other arrangement with any Third Party.
1.35. “ Controlling Affiliate ” of a Person means an Affiliate that controls (as such term is used in the definition of
Affiliate) such Person.
1.36. “ Controlling Third Party ” has the meaning set forth in the definition of Progenics Know-How.
1.37. “ CRO ” has the meaning set forth in Section 9.2(n)(iii).
1.38. “Cure Period ” has the meaning set forth in Section 10.2(a).
1.39. “ Debtor Party ” has the meaning set forth in the Section 10.11.
1.40. “ Designated Countries ” means (a) the Major Market Countries, (b) any country in the Territory in which [*] or [*]
have, [*], [*] and [*], and (c) all other countries in the Territory except [*] and [*].
1.41. “ Development ” means, in respect of a particular compound or pharmaceutical product and a particular country, all
activities related to the development of the compound or
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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product and obtaining Regulatory Approval for the compound or product in the country, including all activities related to
research, development, preclinical testing, stability testing, toxicology, formulation, product line-extensions, clinical trials,
regulatory affairs, statistical analysis, report writing, manufacturing process and scale up, qualification and validation activities,
product life-cycle management, quality assurance/quality control development and regulatory filing creation and submission
related to obtaining Regulatory Approval for the compound or product in the country. When used as a verb, “Develop” or
“Developing” means to engage in Development.
1.42. “ Development Milestone Payments ” has the meaning set forth in Section 6.2.
1.43. “ Development Plan ” has the meaning set forth in Section 4.1.
1.44. “ Disclosing Party ” has the meaning set forth in Section 8.2.
1.45. “ Dispute ” has the meaning set forth in Section 13.12(a).
1.46. “ Drug Price Approval ” means, with respect to any drug product in any country, the achievement of all applicable
pricing and reimbursement approvals with respect to such drug product in such country.
1.47. “ Effective Date ” has the meaning set forth in the first paragraph hereof.
1.48. “ EMEA ” means the European Medicines Association, and any successor agency thereto.
1.49. “ Excelsior ” has the meaning set forth in the first paragraph hereof.
1.50. “ Executive Mediation ” has the meaning set forth in Section 13.12(a).
1.51. “ Expanded Party ” has the meaning set forth in the first paragraph hereof.
1.52. “ FD&C Act ” means the United States Federal Food, Drug, and Cosmetic Act, as amended, and the rules and
regulations promulgated thereunder.
1.53. “ FDA ” means the United States Food and Drug Administration or any successor agency thereto.
1.54. “ Field” means the Human Field and the Non-Human Animal Field, together.
1.55. “ First Commercial Sale ” means, with respect to a particular Product and a particular country in the Territory, the
first commercial sale of such Product to a Third Party in such country after such Product has been granted Regulatory
Marketing Approval by a Regulatory Authority in the Territory. By way of example and for the avoidance of doubt, the
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First Commercial Sale of a [*] shall be the first commercial sale of such Product to a Third Party in such country after such [*]
has been granted Regulatory Marketing Approval by a Regulatory Authority in the Territory for an [*].
1.56. “ FTE Rate ” means the hourly rate of [*] dollars ($[*]) per hour for certain activities that Salix requests Progenics to
perform under the Collaboration. This hourly rate shall apply to Progenics activities through [*], and will be adjusted at the
beginning of each subsequent Calendar Year from the prior year amount by the change in the United States Department of
Labor Bureau of Labor Statistics Consumer Price Index- All Urban Consumers during the prior year.
1.57. “ GAAP ” means U.S. generally accepted accounting principles consistently applied.
1.58. “[ * ] Patent Rights ” means those Patent Rights licensed by [*] [*] to Progenics pursuant to a Third Party
Agreement between [*] and Progenics dated [*], as and to the extent such Patent Rights subsist and claim inventions made on
or prior to the Effective Date and as and to the extent Controlled by Progenics, Progenics’s Affiliates, Salix or Salix’s Affiliates
as of the Effective Date or at any time during the Term.
1.59. “ Human Field ” means all uses in humans, including the diagnosis, treatment or prevention of diseases or
conditions in humans.
1.60. “ Indemnified Party ” has the meaning set forth in Section 11.3.
1.61. “ Indemnifying Party ” has the meaning set forth in Section 11.3.
1.62. “ IND ” means an investigational new drug application, clinical study application, clinical trial exemption, or similar
application or submission for approval to conduct human clinical investigations filed with or submitted to a Regulatory
Authority in conformity with the requirements of such Regulatory Authority.
1.63. “Initial Commercialization Outline ” has the meaning set forth in Section 5.1.
1.64. “ Initial Development Outline ” has the meaning set forth in Section 4.1.
1.65. “ Invoiced Sales ” has the meaning set forth in the definition of Net Sales.
1.66. “ Japan ” means the country of Japan (Nihon/Nippon Koku).
1.67. “ JDC ” has the meaning set forth in Section 3.1(a).
1.68. “ Joint Know-How ” means any Know-How made or created in the course of the Collaboration jointly by employees
or agents of Progenics or any of its Affiliates or licensees (to
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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the extent such Know-How involving such a licensee is Controlled by Progenics) and employees or agents of Salix or any of its
Affiliates or Sublicensees (to the extent such Know-How involving such a Sublicensee is Controlled by Salix), as determined in
accordance with Section 7.1(a).
1.69. “ Joint Patent Rights ” means any Patent Rights related to any invention, development or discovery made or created
in the course of the Collaboration jointly by employees or agents of Progenics or any of its Affiliates or licensees (to the extent
such Patent Rights involving such a licensee is Controlled by Progenics) and employees or agents of Salix or any of its
Affiliates or Sublicensees (to the extent such Patent Rights involving such a Sublicensee is Controlled by Salix), as determined
in accordance with Section 7.1(a).
1.70. “ Joint Technology ” means the Joint Know-How and the Joint Patent Rights.
1.71. “ JSC ” has the meaning set forth in Section 3.1(a).
1.72. “ Know-How ” means any confidential unpatented or unpatentable invention, development, discovery, technology,
cell line, biological material, compound, probe, sequence, technical information, method, biological material, Clinical Data, or
other confidential information or material.
1.73. “ Liability ” has the meaning set forth in Section 11.1.
1.74. “ License Notice ” has the meaning set forth in Section 2.13(a).
1.75. “ Licensed Activit(y/ies) ” means, collectively, the Development and Commercialization of any Product in the Field in
or for the Territory, the practice of any Progenics Technology or Joint Technology pursuant to the licenses granted by
Progenics to Salix hereunder or by Salix to its Affiliates or Sublicensees pursuant hereto, or the exercise of any other right
granted by Progenics to Salix under this Agreement or by Salix to its Affiliates or Sublicensees pursuant hereto, in each case to
the extent permitted under this Agreement.
1.76. “ Licensed Know-How ” means (a) the Progenics Know-How and (b) Progenics’s interest in the Wyeth Collaboration
Joint Know-How, the Wyeth Collaboration Know-How, the Ono Collaboration Joint Know-How, the Ono Collaboration Know-
How, and Know-How included in the Wyeth Additional Licensed Rights.
1.77. “ Licensed Patent Rights ” means (a) the Progenics Patent Rights and (b) Progenics’s interest in the Wyeth
Collaboration Joint Patent Rights, the Wyeth Collaboration Patent Rights, the Ono Collaboration Joint Patent Rights, the Ono
Collaboration Patent Rights, Patent Rights included in the Wyeth Additional Licensed Rights, and the Ono Additional Patent
Rights.
1.78. “ Licensed Technology ” means the Licensed Know-How and the Licensed Patent Rights.
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1.79. “ Major Market Country ” means any of [*] and [*]. In the event that, and commencing at such time as, the [*] set
forth in this Agreement are [*], then [*] shall also be a “Major Market Country” for purposes of this definition.
1.80. “ Manufacture ” or “ Manufacturing ” means, in respect of a particular compound or pharmaceutical product, those
manufacturing-related activities that support Development and Commercialization activities for such compound or product,
including the synthesis, formulating, processing, scale-up, validation, qualification and audit of manufacturing facilities, bulk
production, packaging, Product Labeling, fill/finish work, storage and release of such compound or product and related quality
assurance/quality control and technical support activities.
1.81. “[ * ] Agreement ” means the Exclusive License Agreement, dated [*] [*], between [*], [*] and Progenics.
1.82. “ [ * ] Patent Rights” means those Patent Rights licensed to Progenics under the [*], as and to the extent such
Patent Rights subsist and claim inventions made on or prior to the Effective Date and as and to the extent Controlled by
Progenics, Progenics’s Affiliates, Salix or Salix’s Affiliates as of the Effective Date or at any time during the Term.
1.83. “ NDA ” means a New Drug Application that is filed with the FDA to formally propose that the FDA approve a new
drug for sale and marketing in the United States, or an equivalent application or submission.
1.84. “ Net Sales ” means, for any period, the gross amount invoiced by Salix and its Affiliates for sales of Products to
Third Parties (other than Sublicensees) (the “ Invoiced Sales ”), less deductions for
(a) normal and customary trade, quantity and cash discounts and sales returns and allowances, including (i) those
granted on account of price adjustments, billing errors, rejected goods, damaged goods and returns, (ii) reimbursements,
rebates, chargebacks, incentives and similar payments to wholesalers and other distributors, buying groups, pharmacy
benefit management organizations and health care insurance carriers, and (iii) coupons, co-pay cards and similar price
reductions and discounts provided to customers;
(b) freight, postage, shipping and insurance expenses to the extent that such items are included in the Invoiced
Sales;
(c) customs and excise duties and other duties related to the sales to the extent that such items are included in the
Invoiced Sales;
(d) rebates and similar payments made with respect to sales paid for by any governmental or regulatory authority
such as, by way of illustration and not in limitation of the Parties’ rights hereunder, Federal or state Medicaid, Medicare or
similar state program or equivalent foreign governmental program;
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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(e) sales and other taxes and duties actually paid by Salix and its Affiliates and Sublicensees and directly related to
the sale or delivery of the relevant Product (but not including taxes assessed against the income derived from such sale);
(f) in respect of sales outside the United States, deductions in the applicable jurisdiction that are substantially
similar to deductions otherwise set forth in clauses (a) through (e), above, but because of local Applicable Law, practices and
customs may not conform in terminology to the deductions set forth in the said clauses (a) through (e);
(g) product placement and similar fees paid to pharmacies only in connection with the initial launch of a Product
and within [*] ([*]) [*] of the commencement of such launch; and
(h) any such invoiced amounts that are not collected by Salix or its Affiliates, provided that, to the extent that any
uncollected invoiced amount relates to a group of products, the deduction taken for such uncollected amount shall only take
into account the share of such uncollected amount fairly allocable to Products;
in each case, as accounted for in accordance with United States generally accepted accounting principles, consistently applied.
Any of the deductions listed above that involves a payment by Salix or its Affiliates shall be taken as a deduction in the Quarter
in which the payment is accrued by such entity, and if such accrual is reversed a corresponding credit will be made to Net Sales
in the Quarter in which the reversal is made. Deductions pursuant to subsection (h) above shall be taken in the Quarter in which
such sales are no longer recorded as a receivable. For purposes of determining Net Sales, a Product shall be deemed to be sold
when invoiced and a “sale” shall not include transfers or dispositions for charitable, promotional, pre-clinical, clinical,
regulatory or governmental purposes to the extent no amount is received by Salix or its Affiliates in connection therewith.
Without derogation to the foregoing, a “sale” shall include a transfer or other disposition for consideration other than cash, in
which case such consideration shall be valued at the fair market value thereof.
For purposes of calculating Net Sales, sales between or among Salix and its Affiliates and Sublicensees shall be excluded
from the computation of Net Sales, but sales by Salix and its Affiliates to Third Parties other than Sublicensees shall be included
in the computation of Net Sales. For the avoidance of doubt, the preceding sentence shall not apply for purposes of the
determination of Sublicense Revenue.
If Salix or its Affiliates should, in a given country during a given accounting period, sell a Product that contains one or
more active ingredients in addition to the Compound (which may be
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
15
either combined in a single formulation or bundled with separate formulations but sold as one product), Net Sales for such
combination product shall be calculated by [*]. If, on a country-by-country basis, either the relevant Product, on the one hand,
or such other active ingredient or ingredients in the combination product, on the other hand, is, or both of the foregoing are, not
sold separately in said country, Net Sales for the purpose of determining royalties of the relevant Product shall be determined
by the respective chief financial officers of the Parties in good faith and in a manner consistent with the intent of this
Agreement, provided that any matters in dispute with respect thereto shall be reasonably determined by the chief financial
officer of [*] in a manner consistent with the intent of this Agreement unless an Expanded Party invokes the procedures set
forth in Section 13.12 hereof with respect to such matter.
During the Term, Salix shall not “bundle” a Product for sale together with one or more other products or offer a Product for
sale as a “loss leader” to encourage the sale of one or more other product(s) without first reaching an agreement with Progenics,
to be negotiated between Progenics and Salix in good faith, in respect of the appropriate allocation, in accordance with
Applicable Law, of the gross amount invoiced for such group or bundle of products between the Product and other products in
the bundle or group.
No sales of Products that give rise to, or are made pursuant to arrangements involving, Sublicense Revenue that is shared
between Salix and Progenics pursuant to Section 6.4(a) shall constitute or be included in Net Sales.
1.85. “ New Progenics OIC Product ” has the meaning set forth in Section 2.13(a).
1.86. “ Non-Debtor Party ” has the meaning set forth in Section 10.11.
1.87. “ Non-Human Animal Field ” means all uses in non-human animals, including the diagnosis, treatment or prevention
of diseases or conditions in non-human animals.
1.88. “ Notice of Breach ” has the meaning set forth in Section 10.2(a).
1.89. “ Ono ” has the meaning set forth in the Background.
1.90. “ Ono Additional Patent Right s” means those Patent Rights under which Ono grants a license to Progenics
pursuant to Section 2.6.2 of the Ono Agreement.
1.91. “ Ono Agreement ” has the meaning set forth in the Background.
1.92. “ Ono Collaboration Joint Know-How ” means the “Joint Know-How” as such term is defined in the Ono
Agreement, as and to the extent Controlled by Progenics or its Affiliates as of the Effective Date or at any time during the Term,
which relates to the Compound or a Product or to the use of the Compound or a Product.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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1.93. “ Ono Collaboration Joint Patent Rights ” means the “Joint Patent Rights” as such term is defined in the Ono
Agreement, as and to the extent such rights subsist and as and to the extent Controlled by Progenics or its Affiliates as of the
Effective Date or at any time during the Term, which relate to the Compound or a Product or to the use of the Compound or a
Product.
1.94. “ Ono Collaboration Know-How ” means the “Ono Collaboration Know-How” as such term is defined in the Ono
Agreement, as and to the extent Controlled by Progenics or its Affiliates as of the Effective Date or at any time during the Term,
which relates to the Compound or a Product or to the use of the Compound or a Product.
1.95. “ Ono Collaboration Patent Rights ” means the “Ono Collaboration Patent Rights” as such term is defined in the
Ono Agreement, as and to the extent such rights subsist and as and to the extent Controlled by Progenics or its Affiliates as of
the Effective Date or at any time during the Term, which relate to the Compound or a Product or to the use of the Compound or
a Product.
1.96. “Ono Independent Patent Rights” means the “Ono Independent Patent Rights” as such term is defined in the Ono
Agreement.
1.97. “ Oral Product ” means any Product that is formulated to be administered orally for use in the Human Field.
1.98. “[ * ]” has the meaning set forth in Section [*].
1.99. “Other Product ” has the meaning set forth in Section 1.168.
1.100. “ Outside Contractor ” means any Person contracted by Salix or Progenics or an Affiliate or Sublicensee thereof to
provide products or services relating to the Collaboration, including contract manufacturing services, clinical services or
regulatory services that contribute to the performance of its responsibilities under the Development Plan or that result in any
work product or other information that Progenics or Salix or such Affiliate or Sublicensee could include or might reasonably be
expected to include in any document or report, including, a Registrational Filing, submitted to a Regulatory Authority or subject
to review by a Regulatory Authority.
1.101. “ Partial Termination Agreement ” has the meaning set forth in the Background.
1.102. “ Party ” and “ Parties ” have the meaning set forth in the first paragraph hereof.
1.103. “ Patent Rights ” means (a) all national, regional and international patent applications, including divisionals,
continuations, continuations-in-part, provisionals, converted provisionals, and continued prosecution applications, and all
international equivalents thereof, (b) all national, regional and international patents, including utility models, petty patents and
design patents and certificates of invention, (c) any and all extensions or restorations of patents
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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by existing or future extension or restoration mechanisms, including revalidations, reissues, re-examinations and extensions
(including any supplementary protection certificates and the like) and (d) any similar rights, including so-called pipeline
protection, or any importation, revalidation, confirmation or introduction patent or registration patent or patent of additions.
1.104. “ Patent Term Extension ” shall mean any extension of Patent Rights that may be granted by any patent office or
regulatory office, including supplemental protection certificates (“ SPCs ”).
1.105. “ Person ” means any individual or legal entity.
1.106. “ Phase 4 Clinical Trial ” means, in respect of a pharmaceutical product, product support clinical trials of the
product not for the purpose of obtaining Regulatory Marketing Approval of the product, whether such clinical trials are
commenced before or after receipt of Regulatory Marketing Approval of the product.
1.107. “ Product ” means a pharmaceutical product containing the Compound, whether alone or in combination with other
APIs or other substances and whether formulated to be administered subcutaneously, intravenously, orally or otherwise. A
Product shall be considered separate from another Product if, in order to obtain Regulatory Marketing Approval for such
second Product, the applicant is required to submit Clinical Data not submitted or required to be submitted in order to obtain
Regulatory Marketing Approval for the first Product.
1.108. “ Product Information ” has the meaning set forth in Section 8.1(a).
1.109. “ Product Labeling ” means, with respect to a particular pharmaceutical product and a particular country, (a) the full
prescribing information for the product approved by the applicable Regulatory Authorities in such country, including any
required patient information; and (b) all labels and other written, printed or graphic matter physically upon a container, wrapper
or any package insert utilized with or for the product in such country.
1.110. “ Product Trademarks ” means the Trademarks, including all product packaging and other trade dress, and all
copyrights relating thereto and therein, used, held for use or intended for use on or in connection with the Development and
Commercialization of Products.
1.111. “ Progenics ” has the meaning set forth in the first paragraph hereof.
1.112. “ Progenics Indemnified Party ” has the meaning set forth in Section 11.1.
1.113. “ Progenics Know-How ” means Know-How as and to the extent Controlled by Progenics or its Affiliates as of the
Effective Date or at any time during the Term which relates to the Compound or a Product or to the Manufacture, use, sale,
Development or Commercialization of the Compound or a Product. For the purposes hereof, Progenics Know-How does not
include Wyeth Collaboration Know-How, Wyeth Collaboration Joint Know-How, Ono Collaboration Know-How, Ono
Collaboration Joint Know-How, Salix Collaboration Know-How, Progenics’s interest in Joint Know-How, or Know-How
Controlled by a Third Party that becomes an Affiliate of Progenics pursuant to a transaction or series of related transactions as
a result of which such Third Party is able to elect a majority of the members of the board of
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directors of Progenics (or its successor company) or any of its Controlling Affiliates (a “ Controlling Third Party ”) to the
extent such Controlling Third Party’s Know-How was Controlled by such Controlling Third Party (and not by Progenics) prior
to the completion of such transaction or series of related transactions.
1.114. “Progenics Party ” and “ Progenics Parties ” have the meaning set forth in the first paragraph hereof.
1.115. “ Progenics Patent Rights ” means any Patent Right as and to the extent subsisting and as and to the extent
Controlled by Progenics or its Affiliates as of the Effective Date or at any time during the Term having issued claims that, or
pending claims that if issued, would be infringed by an unlicensed Third Party’s Manufacture, use, sale, importation,
Development or Commercialization of the Compound or any Product. For the purposes hereof, the Progenics Patent Rights
include the [*] Patent Rights, the [*] Patent Rights and the [*] Patent Rights, and shall continue to include such Patent Rights
even if the underlying Third Party Agreement by which Progenics obtains any such Patent Rights is assigned to Salix or to a
Salix Affiliate. For the avoidance of doubt, the calculation of the Royalty Period shall not be affected by such an assignment of
any such Third Party Agreement. For the purposes hereof, “Progenics Patent Rights” does not include Wyeth Collaboration
Patent Rights, Wyeth Collaboration Joint Patent Rights, Ono Collaboration Patent Rights, Ono Collaboration Joint Patent
Rights, Progenics’s interest in Joint Patent Rights or Patent Rights Controlled by a Controlling Third Party to the extent such
Controlling Third Party’s Patent Rights were Controlled by such Controlling Third Party (and not by Progenics) prior to the
completion of the transaction or series of related transactions through which a Third Party became such Controlling Third Party.
Progenics Patent Rights in the Territory as of the Effective Date are identified on Schedule 9.2(a)(i) .
1.116. “ Progenics Technology ” means the Progenics Know-How and the Progenics Patent Rights.
1.117. “ Progenics Third Party Agreement ” means any agreement in effect as of the Effective Date (a) under which any
Progenics Party or any of its Affiliates is granted any license or otherwise has any rights or interests under or in respect of any
Licensed Technology or (b) that relates to the Manufacture, Development, or Commercialization of the Compound or any
Product in the Territory, including the agreements listed in Schedule 9.2(a)(ii) .
1.118. “ Promotional Materials ” means, with respect to a particular pharmaceutical product, all [*] materials with respect
to the product and all [*] or [*] matter, including [*] and [*] and [*] and [*] (for example, [*] and other such items) intended for
use or used in connection with any promotion of the product, except Product Labeling.
1.119. “ ProNev ” has the meaning set forth in the first paragraph hereof.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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1.120. “ Quarter ” means the respective periods of three (3) consecutive calendar months ending on
March 31, June 30, September 30 or December 31, for so long as this Agreement is in effect.
1.121. “ Quarterly Activity Report ” has the meaning set forth in Section 6.6(b).
1.122. [*].
1.123. “ Recall ” means, with respect to any pharmaceutical product, a “recall” or a “product withdrawal” or a “stock
recovery” or any similar term as utilized by any Regulatory Authority under such Regulatory Authority’s procedures regarding
the recall of pharmaceutical products, as the same may be amended from time to time, and shall include any post-sale warning or
mailing of information regarding such product, including any warnings or mailings described in the Regulatory Authority’s
product recall procedures.
1.124. “ Receiving Party ” has the meaning set forth in Section 8.2.
1.125. “ Registrational Filing ” means an application submitted to a Regulatory Authority seeking a Regulatory
Marketing Approval.
1.126. “ Regulatory Approval ” means, in respect of a particular country, the technical, medical and scientific licenses,
registrations, authorizations and approvals of any Regulatory Authority necessary for the Development, clinical testing,
Manufacture, distribution, marketing, promotion, offering for sale, use, import, export, sale or other Commercialization of a drug
product in such country, including INDs, NDAs, Biologic License Applications, Registrational Filings, supplements and
amendments, pre- and post- approvals, Drug Price Approval, drug naming approvals, Product Labeling approvals, and drug
master files.
1.127. “ Regulatory Authority ” means, with respect to a particular country, any national (e.g., the FDA), supra-national
(e.g., the European Commission, the Council of the European Union, or the European Agency for the Evaluation of Medicinal
Products), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity
involved in the granting of a Regulatory Approval for such country.
1.128. “ Regulatory Documentation ” means, in respect of a particular drug product, (a) the trial master file and all
regulatory files relating to the Development, Regulatory Approval, Manufacture or Commercialization of the product, including
any licenses (to the extent transferable), minutes of meetings and telephone conferences with any Regulatory Authorities,
validation data, preclinical and clinical studies and tests related to the product (including all audit reports of clinical studies and
all other Clinical Data), all applications (and amendments thereto) for Regulatory Approvals, annual reports and safety reports
associated therewith, and all correspondence with Regulatory Authorities regarding the marketing status of the product; and
(b) all records maintained under cGMP or other Applicable Law, including record keeping or
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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reporting requirements of Regulatory Authorities, all correspondence and communications with Regulatory Authorities in
connection with the product, including those relating to any Product Labeling or Promotional Materials, adverse event files,
complaint files or manufacturing records.
1.129. “ Regulatory Marketing Approval ” means, in respect of a particular country, a Regulatory Approval authorizing
the marketing of a drug product in such country for any indication. For the sake of clarity, Regulatory Marketing Approval
(a) shall be deemed to have occurred when (i) the Regulatory Authority sends a notification of such Regulatory Marketing
Approval to the applicant seeking Regulatory Marketing Approval or, (ii) if Applicable Law provides for authorization for the
marketing of a drug product by an action or event other than a notification, then when such action or event has been taken or
occurred, and (b) shall not require that Drug Price Approval or any other Regulatory Approval has occurred.
1.130. “ Related Agreements ” has the meaning set forth in Section 13.6.
1.131. “ RELISTOR Marks ” has the meaning set forth in Section 9.2(m).
1.132. “ Royalty Period ” means, with respect to any particular Product in any particular country, the period of time
beginning with the [*] and extending until the later of
(a) the expiration of the last to expire of any Valid Claim included in any [*] which, in any such case, would be
infringed by an unlicensed Third Party’s Manufacture, use, sale, importation, Development or Commercialization of such
Product in the Field in such country;
(b) the date on which there is no marketing exclusivity right with respect to the Product [*]; and
(c) the fifteenth (15th) anniversary of the First Commercial Sale [*]; provided, however , that notwithstanding the
foregoing, the period set forth in this clause (c) with respect to any particular Product in any particular country shall
terminate effective as of the first day of any Quarter in which either
(i) (A) one or more Persons other than Salix or Salix’s Affiliates or Sublicensees sell one or more Unauthorized
Generic Products in respect of such Product in such country, and (B) the unit sales of such Unauthorized Generic Product(s) in
such country during such Quarter amount in the aggregate to more than [*] percent ([*]%) of the Unauthorized Generic Product
Market in such country for the relevant Product (excluding, for purposes of this clause (i) only, clause (b) from the definition of
“Unauthorized Generic Product Market”); or
(ii) (A) one or more Persons other than Salix or Salix’s Affiliates or Sublicensees sell one or more Unauthorized
Generic Products in such country that would be included in the determination of the Unauthorized Generic Product Market for
the relevant
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
21
Product in such country, and (B) the unit sales of such Unauthorized Generic Product(s) in such country during such Quarter
amount in the aggregate to more than [*] percent ([*]%) of the Unauthorized Generic Product Market in such country for the
relevant Product;
but shall resume, in the case where termination was triggered pursuant to clause (i), if Progenics demonstrates to the reasonable
satisfaction of Salix, using independent data from IMS or Wolters Kluwer or such similar organization reporting pharmaceutical
sales information as the Parties may agree, that the unit sales of such Unauthorized Generic Product(s) in respect of such
Product in such country have fallen below [*] percent ([*]%) of the Unauthorized Generic Product Market in such country for
the relevant Product (excluding, for such purpose only, clause (b) from the definition of “Unauthorized Generic Product
Market”) for at least [*] ([*]) consecutive [*] or, in the case where termination was triggered pursuant to clause (ii), if Progenics
demonstrates to the reasonable satisfaction of Salix, using independent data from IMS or Wolters Kluwer or such similar
organization reporting pharmaceutical sales information as the Parties may agree, that the unit sales of such Unauthorized
Generic Product(s) in respect of such Product in such country have fallen below [*] percent ([*]%) of the Unauthorized Generic
Product Market in such country for the relevant Product for at least [*] ([*]) consecutive [*]. If the period set forth in this clause
(c) resumes pursuant to the proviso clause in the preceding sentence, then such resumption shall occur effective as of the date
(either during or after such [*] ([*]) [*] period) on which Salix receives notice from Progenics that the requirements for
resumption as set forth in such proviso clause have been satisfied.
By way of example, if during a Quarter in country X:
[*].
1.133. “ Safety Agreement ” has the meaning set forth in Section 12.7.
1.134. “ Salix ” has the meaning set forth in the first paragraph hereof.
1.135. “ Salix COGs ” has the meaning set forth in Schedule 1.135 .
1.136. “ Salix Collaboration Know-How ” means any Know-How relating to the Compound or any Product, as and to the
extent Controlled at any time during the Term by Salix or its Affiliates (as determined in accordance with Section 7.1(a)), that is
made or created in the course of and arising out of the Collaboration solely by employees or agents of Salix or any of its
Affiliates or Sublicensees.
1.137. “ Salix Collaboration Patent Rights ” means any Patent Right, as and to the extent subsisting and as and to the
extent Controlled at any time during the Term by Salix or its Affiliates, that claims inventions made solely by employees or
agents of Salix or any of its Affiliates or Sublicensees (as determined in accordance with Section 7.1(a)) in the course of and
arising out of the Collaboration that, if issued, would be infringed by an unlicensed Third Party’s Manufacture, use, sale,
importation, Development or Commercialization of the Compound or any Product.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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1.138. “ Salix Collaboration Technology ” means Salix Collaboration Know-How and Salix Collaboration Patent Rights.
1.139. “ Salix Competitor ” means any of those companies set forth in Schedule 1.139 , and their successors.
1.140. “ Salix Indemnified Party ” has the meaning set forth in Section 11.2.
1.141. “ Salix Independent Patent Rights ” means any Patent Right, as and to the extent subsisting and as and to the
extent Controlled by Salix or its Affiliates, that, if issued, would be infringed by an unlicensed Third Party’s Manufacture, use,
sale, importation, Development or Commercialization of the Compound or any Product, other than the Progenics Patent Rights,
Joint Patent Rights, Wyeth Collaboration Patent Rights, Wyeth Collaboration Joint Patent Rights, Ono Collaboration Patent
Rights, Ono Collaboration Joint Patent Rights, and Salix Collaboration Patent Rights.
1.142. “ Salix Non-Defaulting Termination ” has the meaning set forth in Section 13.22(b).
1.143. “ SEC” has the meaning set forth in Section 8.4.
1.144. “[ * ] ” has the meaning set forth in Section [*].
1.145. “ SPC ” has the meaning set forth in the definition of Patent Term Extension.
1.146. “ Specified Product ” has the meaning set forth in Section 1.168.
1.147. “ Subject Agreements ” means the [*] Agreement, the [*] Agreement and related agreements, the [*] Agreement,
and the [*] Agreement.
1.148. “ Subject Country ” has the meaning set forth in Section 9.2(n)(iv).
1.149. “ Subject Documentation ” has the meaning set forth in Section 9.2(n)(i).
1.150. “ Subject Law ” has the meaning set forth in Section 9.2(n)(iv).
1.151. “ Sublicense ” means, directly or indirectly, to sublicense, grant any other right with respect to, or agree not to
assert, any right licensed to Salix under this Agreement. When used as a noun, “Sublicense” means any agreement to
Sublicense.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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1.152. “ Sublicense Revenue ” means all payments directly or indirectly by or on behalf of a Sublicensee to Salix or its
Affiliates relating to, or resulting from, in either case directly or indirectly, an arrangement respecting any one or more of a
Sublicense or Compound or Product or sales thereof, including (a) all upfront and other payments payable to Salix upon
execution of a Sublicense with a Sublicensee in respect of Salix’s rights hereunder; (b) all development, regulatory,
commercialization or other milestone payments for milestones under any such Sublicense; (c) all license maintenance fees under
any such Sublicense; (d) all payments to Salix for the supply of Products; (e) all payments to Salix under any such Sublicense
for the reimbursement of research and development costs incurred by Salix; (f) the fair market value of any equity securities
issued in respect of any such Sublicense to Salix that exceeds any amount paid by Salix for such securities; (g) the amount by
which any amount paid by a Sublicensee to Salix for equity securities issued to such Sublicensee in respect of any such
Sublicense exceeds the fair market value of such equity securities; (h) all royalties, profit share payments and other payments
based on the sales of Products; and (i) the fair market value of any other form of consideration paid to Salix by a Sublicensee for
a Sublicense granted by Salix pursuant to this Agreement, but excluding in all cases Salix COGs to procure or Manufacture
Products for which payments under clause (d) above are made to Salix and Salix’s actual cost to perform activities in and
specifically for the sublicensed territory for which payments under clause (e) above are made to Salix. The amount of Sublicense
Revenue for any Quarter shall be reduced by any amount of Sublicense Revenue previously received by Salix that Salix is
required to return or refund to the payor thereof during such Quarter.
1.153. “ Sublicense Revenue Report ” has the meaning set forth in Section 6.6(b).
1.154. “ Sublicensee ” means any Third Party who is granted a Sublicense.
1.155. “ Sued Party ” has the meaning set forth in Section 7.4(d).
1.156. “ Term ” has the meaning set forth in Section 10.1.
1.157. “ Termination Agreement ” has the meaning set forth in the Background.
1.158. “ Territory ” means the entire world, excluding, subject to the provisions of Section 2.12, Japan.
1.159. “ Third Party ” means any Person other than Salix, the Progenics Parties or their respective Affiliates.
1.160. “ Third Party IP Rights ” has the meaning set forth in Section 7.4(b).
1.161. “ Third Party License ” has the meaning set forth in Section 6.5(d).
1.162. “ Title 11 ” shall have the meaning set forth in Section 10.11.
1.163. “ Trademark ” means any trademark, service mark, trade name, trade dress, brand name, product shape, logo,
slogan, design, design rights, or any other similar designation of source or origin, whether or not registered, and all statutory
and common law rights therein and registrations and applications therefor, together with all goodwill symbolized by any of the
foregoing.
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1.164. “ Trademark Countries ” has the meaning set forth in Section 9.2(m)(ii).
1.165. “ Transition Agreement ” has the meaning set forth in Section 5.2(a).
1.166. “[ * ]” has the meaning set forth in Section [*].
1.167. “ Unauthorized Generic Product ” means, with respect to any Product, on a Product-by-Product basis, a
pharmaceutical product (other than the Product itself) sold by an unlicensed Third Party that contains the Compound and gains
Regulatory Marketing Approval for one of the same indications as such Product without de novo evidence of safety and
efficacy, such as through an abbreviated new drug application as defined in 21 U.S.C. 355(j) or an application submitted
pursuant to 21 U.S.C. 355(b)(2) (or their equivalent outside the United States).
1.168. “ Unauthorized Generic Product Market ” means, for any Quarter with respect to any Product in any country in
the Territory (the “ Specified Product ”), [*]. Unauthorized Generic Product sales shall be determined using independent market
data (where available) published by IMS, Wolters Kluwer or such similar organization reporting pharmaceutical sales
information as the Parties may agree.
1.169. “ United States, ” “ U.S. ” or “ USA ” means the United States of America, its territories and possessions, including
Puerto Rico.
1.170. “ University of Chicago ” has the meaning set forth in Section 2.4(a).
1.171. “ UR Labs ” has the meaning set forth in Section 13.22.
1.172. “ UR Labs-Progenics Agreement ” has the meaning set forth in Section 13.22.
1.173. “ Valid Claim ” means, with respect to a particular Product and country, a claim of a patent application or an issued
and unexpired patent that has not lapsed, been canceled or become abandoned or been held unpatentable, revoked,
unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or
unappealed within the time allowed for appeal (except, in both cases, to the United States Supreme Court or any similar court of
final appeal that hears matters at its discretion in a jurisdiction other than the United States), and that has not been admitted to
be invalid or unenforceable through reissue, disclaimer or otherwise. If a claim of a pending patent application has not issued as
a claim of an issued patent within [*] ([*]) years after the earliest priority date for such claim, then such claim shall cease to be a
Valid Claim unless and until such claim becomes an issued claim of an issued patent.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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1.174. “ Voting Stock ” has the meaning set forth in the definition of Change in Control.
1.175. “ Wyeth ” means Wyeth LLC, a Delaware limited liability company, or as appropriate, collectively Wyeth, acting
through Wyeth Pharmaceuticals Division, Wyeth Whitehall Pharmaceuticals, Inc. and Wyeth Ayerst Lederle, Inc.
1.176. “ Wyeth Additional Licensed Rights ” means those Patent Rights, Know-How and other rights under which Wyeth
grants a license to Progenics as provided in Section 6.4.1 of the Termination Agreement.
1.177. “ Wyeth Agreement ” has the meaning set forth in the Background.
1.178. “ Wyeth Collaboration Joint Know-How ” means the “Joint Know-How” as such term is defined in the Wyeth
Agreement, as and to the extent such rights are Controlled by Progenics or its Affiliates as of the Effective Date or at any time
during the Term, which relates to the Compound or a Product or to the use of the Compound or a Product.
1.179. “ Wyeth Collaboration Joint Patent Rights ” means the “Joint Patent Rights” as such term is defined in the Wyeth
Agreement, as and to the extent such rights subsist and as and to the extent Controlled by Progenics or its Affiliates as of the
Effective Date or at any time during the Term, which relate to the Compound or a Product or to the use of the Compound or a
Product.
1.180. “ Wyeth Collaboration Know-How ” means the “Wyeth Collaboration Know-How” as such term is defined in the
Wyeth Agreement, as and to the extent Controlled by Progenics or its Affiliates as of the Effective Date or at any time during
the Term, which relates to the Compound or a Product or to the use of the Compound or a Product.
1.181. “ Wyeth Collaboration Patent Rights ” means the “Wyeth Collaboration Patent Rights” as such term is defined in
the Wyeth Agreement, as and to the extent such rights subsist and as and to the extent Controlled by Progenics or its Affiliates
as of the Effective Date or at any time during the Term, which relate to the Compound or a Product or to the use of the
Compound or a Product.
1.182. “ Wyeth Independent Patent Rights ” means the “Wyeth Independent Patent Rights” as such term is defined in the
Wyeth Agreement.
1.183. “[ * ] Patent Rights ” means those Patent Rights to be licensed by [*] to Progenics pursuant to a Third Party
Agreement contemplated between [*] and Progenics, as and to the extent such Patent Rights subsist and claim inventions made
on or prior to the Effective Date and as and to the extent Controlled by Progenics, Progenics’s Affiliates, Salix or Salix’s
Affiliates as of the Effective Date or at any time during the Term.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
26
2. LICENSE GRANTS AND RELATED MATTERS
2.1. License from Progenics to Salix. Subject to the terms and conditions of this Agreement, the Progenics Parties hereby
grant to Salix, and Salix hereby accepts in respect of the Licensed Technology and the Progenics Parties’ interest in the Joint
Technology:
(a) the exclusive license, even as to the Progenics Parties and their Affiliates, with the right to grant Sublicenses in
accordance with Section 2.2, (i) to Develop the Compound and Products in the Territory for use and Commercialization in the
Field in the Territory and (ii) to Commercialize Products in the Field in the Territory; and
(b) a non-exclusive license, with the right to grant Sublicenses in accordance with Section 2.2, to Manufacture or
have Manufactured in the Territory (i) Products for use or Commercialization by Salix and its Sublicensees under the license
granted under Section 2.1(a) and (ii) Compound for incorporation into such Products.
Salix acknowledges that with respect to any Progenics Technology and any of the Progenics Parties’ rights in the Wyeth
Collaboration Joint Patent Rights, the Wyeth Collaboration Joint Know-How, the Wyeth Collaboration Patent Rights, the
Wyeth Collaboration Know-How, the Ono Collaboration Joint Patent Rights, the Ono Collaboration Joint Know-How, the Ono
Collaboration Patent Rights, the Ono Collaboration Know-How, the Wyeth Additional Licensed Rights, and the Ono Additional
Patent Rights that are Controlled by the Progenics Parties pursuant to Progenics Third Party Agreements, the license granted in
this Section 2.1 is subject to the rights of the Third Party licensors under such Progenics Third Party Agreements.
Subject to the terms and conditions of this Agreement, Progenics retains the non-exclusive, non-transferable, non-licensable
right under the Progenics Technology and Joint Technology solely to make, have made, import, export and use the Compound
and Develop the Compound and the Products, in each case solely for the purpose of performing its obligations under this
Agreement.
2.2. Sublicenses.
(a) The licenses granted to Salix in Section 2.1 shall include the right to grant Sublicenses through multiple tiers of
Sublicensees (i) in the Human Field in the Territory other than the United States and (ii) in the Non-Human Animal Field in
the Territory. In order to facilitate the operation of the provisions of Section 6.4, Salix agrees that it will not “bundle” a
Product for Sublicensing with one or more other products that are not Products or offer a Product for Sublicensing to
encourage the licensing or sublicensing by the Sublicensee of one or more products that are not Products without first
reaching an agreement with Progenics, to be negotiated between Progenics and Salix in good faith, in respect of the
appropriate allocation, in accordance with Applicable Law, the definition of “Sublicense Revenue,” and Section 6.4, of the
gross amount to be received by Salix under any such arrangement between the Product and other products in the bundle or
group.
27
(b) Salix shall, to the extent practical, inform Progenics reasonably in advance of the execution of any Sublicense
that Salix expects to grant under this Agreement in respect of a Major Market Country or [*] or [*] and shall promptly (and, in
the case of material items, within [*] ([*]) Business Days) provide to Progenics (i) notice of any Sublicense granted by Salix
under this Agreement setting forth in reasonable detail the nature of such Sublicense and the identity of the Sublicensee and
(ii) unredacted English-language copies of any agreement with a Third Party granting such Sublicense.
(c) Each Sublicense entered into by Salix shall contain (i) confidentiality, exclusivity, reporting and access to data
and information obligations comparable to those set forth herein as and to the extent relevant to the exercise by Progenics of
its rights hereunder, and (ii) provisions adequate to ensure that (A) neither of the Parties will be precluded during or after the
Term from Manufacturing, Developing and Commercializing the Compound or Products as contemplated hereby pursuant to
the Licensed Technology and the licenses granted pursuant hereto as a result of any invention, development or discovery,
as and to the extent Controlled by the Sublicensee or its Affiliates, that is made or created in the course of or arising out of
Manufacturing, Development and Commercialization activities of the Sublicensee or any of its Affiliates or Sublicensees
under the relevant Sublicense, (B) the Progenics Parties shall have the benefit of all indemnification rights, if any, provided to
Salix under such Sublicense, (C) the amount of Sublicense Revenue in respect of such Sublicense paid to Progenics pursuant
to Section 6.4 shall at no time be less than the amount, if any, Progenics or an Affiliate is required to pay as royalties in
respect of sales of Products pursuant to such Sublicense to the University of Chicago under the 1985 Agreement and to [*]’s
heirs under the [*] Agreement (as such agreements exist on the Effective Date), and (D) Progenics will be provided or have
access to net sales information in respect of sales of Products pursuant to such Sublicense sufficient to satisfy Progenics’
reporting obligations under the 1985 Agreement and the [*] Agreement (as such agreements exist on the Effective Date). For
the avoidance of doubt, in respect of the operation of clause (C) of this Section 2.2(c)(ii) the Parties agree and acknowledge
that the combined effective royalty rate under the 1985 Agreement and the [*] Agreement as such agreements exist on the
Effective Date for the [*] and [*] is [*]%.
(d) Salix hereby guarantees the performance of its Sublicensees and shall remain responsible to Progenics for full
compliance with the terms of this Agreement, including all diligence, payment and reporting obligations. No Sublicense
granted by Salix hereunder shall relieve Salix of any of its obligations under this Agreement.
(e) The Parties agree that appointment by Salix of any bona fide pharmaceutical wholesalers or providers of
pharmaceutical distribution services shall not constitute a sublicense for purposes of this Section 2.2.
2.3. Direct Licenses to Affiliates. Salix may at any time request and authorize Progenics to grant licenses in respect of the
rights licensed to Salix in Section 2.1 (including the
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
28
right to Sublicense as set forth in Section 2.2) directly to wholly owned Affiliates of Salix by giving notice designating to whom
a direct license is to be granted. Upon receipt of any such notice, Progenics shall enter into and sign a separate direct license
agreement with such designated Affiliate of Salix. All such direct license agreements shall be consistent with the terms and
conditions of this Agreement, except for such modifications as may be required by Applicable Law; provided, however, that
Progenics shall have no obligation to enter into any such direct license agreement if the effect of entering into such agreement
(and continuing as a Party to this Agreement) would be to increase the level of obligations owed by or risks assumed by
Progenics, or decrease the consideration owed to Progenics, relative to the obligations owed by, risks assumed by, or
consideration owed to Progenics under this Agreement or otherwise adversely affect Progenics. In countries where validity of
the direct license agreement requires governmental approval or registration, such direct license agreement shall not become
binding between the parties thereto until such approval or registration is granted, which approval or registration shall be
obtained by Salix. All costs of making a direct license, including Progenics’s reasonable attorneys fees, under this Section 2.3
shall be borne by Salix. Salix shall be responsible to Progenics for the performance of its Affiliates under such direct licenses.
2.4. Certain Matters Relating to the University of Chicago.
(a) The Parties hereby acknowledge that, pursuant to that certain [*] dated as of [*] by and among the University
of Chicago, on behalf of itself and its affiliate ARCH Development Corporation (the “ University of Chicago ”), and [*] shall
(i) [*] and (ii) if [*].
(b) The Parties hereby acknowledge that [*]. The Parties further acknowledge that, pursuant to Section [*] of the
[*] and Section [*] of the [*].
2.5. License from Salix to Progenics. Salix hereby grants to Progenics an exclusive, perpetual, irrevocable, royalty-free,
fully paid-up license under the Salix Collaboration Patent Rights and the Salix Collaboration Know-How, and an exclusive,
perpetual, irrevocable, royalty-free, fully paid-up license under Salix’s interest in the Joint Patent Rights and Salix’s interest in
the Joint Know-How, in each case with a right to sublicense, to research, make, have made, use, Develop, sell, offer to sell or
use, have sold, market, promote, import, export, or otherwise Commercialize the Compound or any Products outside the Field or
outside the Territory, without any compensation or royalty relating thereto. Progenics shall timely notify Salix of any
sublicenses. An agreement with any sublicensee shall provide that such sublicense is consistent with and subject to the
material terms and conditions of this Agreement, including without limitation the material obligations of Progenics hereunder.
2.6. Enforcement of Non-Assertion of Rights Covenants . Each Progenics Party shall cooperate with Salix and take such
actions as Salix may reasonably request, and Salix shall reimburse each Progenics Party’s reasonable costs resulting from
actions so requested, as may be necessary to permit Salix to exercise, for the benefit of Salix and its Affiliates and Sublicensees,
the Progenics Parties’ rights (a) under the Termination Agreement to prevent Wyeth from
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
29
asserting any Wyeth Independent Patent Rights against the Progenics Parties or any of their licensees and (b) under the Ono
Agreement to prevent Ono from asserting any Ono Independent Patent Rights against the Progenics Parties or any of their
licensees. For the avoidance of doubt, this Section 2.6 shall require the Progenics Parties to consent to be joined, with the
Progenics Parties’ reasonable costs to be reimbursed by Salix, as a party to any action required to enforce the rights identified in
the preceding sentence, but shall not obligate any Progenics Party to indemnify or defend Salix in respect of any such action.
2.7. Non-Assertion of Progenics’s Rights; Non-Exclusive License Grant; Non-Assertion by Salix .
(a) Non-Assertion of Progenics’s Rights. Progenics shall not, and shall cause its Affiliates not to, bring any action
asserting that the exercise by Salix, its Affiliates or Sublicensees of the rights granted by Progenics to Salix under this
Agreement infringes or would infringe any Patent Rights Controlled by Progenics or its Affiliates.
(b) Non-Exclusive License from Salix to Progenics. In the event that the exercise by Progenics, its Affiliates,
licensees (including Ono), or sublicensees of the rights granted by Salix in Section 2.5 would infringe any Patent Rights
Controlled by Salix or its Affiliates, and which Patent Rights are not covered by the grant in Section 2.5, Salix hereby grants
to Progenics, its Affiliates, licensees and sublicensees to the extent Salix is legally able to do so, a non-exclusive,
sublicensable, royalty-free license outside the Territory under such Patent Rights solely to the extent necessary for
Progenics, its Affiliates, licensees and sublicensees to exploit the rights granted to Progenics and its Affiliates under
Section 2.5.
(c) Non-Assertion by Salix. Salix shall not assert any Salix Independent Patent Rights against Progenics, its
Affiliates or its licensees or sublicensees relating to the Development, Commercialization or other exploitation of the
Compound or any product containing the Compound outside the Territory or outside the Field.
2.8. Fully Paid-Up, Royalty Free License. After expiration of the Royalty Period for any Product in a particular country, the
license granted to Salix under Section 2.1 with respect to such Product in such country shall be a fully paid-up, perpetual, non-
exclusive, irrevocable, royalty-free license.
2.9. Know-How Disclosure and Transfer.
(a) By Progenics . Commencing immediately after the Effective Date, Progenics shall as promptly as reasonably
practicable disclose the then-existing Licensed Know-How in its Control to Salix. During the Term, Progenics shall promptly
disclose to Salix all Licensed Know-How and Joint Know-How, in each case that is developed by Progenics or otherwise
comes into Progenics’s Control. Disclosure of Know-How by
30
Progenics as provided in this Section 2.9(a) shall be accomplished through: (i) the transfer of [*] and [*]; and (ii) the delivery
of [*] and [*]. In addition, Progenics shall use Commercially Reasonable Efforts to cause Wyeth and Ono to provide, for
delivery to Salix, relevant [*] and [*]. The provisions of this Section 2.9 are in addition to, and not by way of limitation of, the
provisions of the Transition Agreement.
(b) By Salix . During the Term, Salix shall promptly disclose to Progenics any Joint Know-How and Salix
Collaboration Know-How.
2.10. Costs of Assistance. Each Progenics Party shall perform the activities it is required to perform under Sections 2.6 and
2.9(a), Article 3, Sections 4.5 and 4.6, Section 5.2(c) and (d) and Articles 7 and 12, except as otherwise specifically provided
therein, at no charge to Salix. If Salix shall request that a Progenics Party perform any other activities in connection with the
Collaboration or the Commercialization and Development of the Compound or any Product, then Salix shall reimburse the
applicable Progenics Party for any and all costs the Progenics Party incurs, including out-of-pocket costs (including travel) and
personnel costs at the FTE Rate. Salix shall reimburse the applicable Progenics Party for such costs within [*] ([*]) days of
Salix’s receipt of an invoice therefor accompanied by reasonable documentation. Salix shall have no obligation to reimburse any
Progenics Party for any costs that may be incurred by the Progenics Parties or their Affiliates in respect of any activity, whether
or not relating to the Collaboration, that is not specifically requested by Salix in writing.
2.11. No Implied Rights. Except as expressly provided in this Agreement, neither Party shall be deemed to have granted
the other Party any license or other right with respect to any intellectual property of such Party.
2.12. Japan. Provided that Salix is at such time in compliance in all material respects with its obligations under this
Agreement, in the event that at any time the Ono Agreement should terminate or be modified with the result that rights in
respect of the Development, Commercialization or Manufacture of Products in Japan licensed or otherwise granted by Progenics
to Ono pursuant to the Ono Agreement revert to or otherwise come to be Controlled, directly or indirectly and in any manner
whatsoever, by Progenics or its Affiliates, then the terms of this Agreement shall automatically, without further action by either
Party and without any further payment by or on behalf of Salix, be, and they are hereby, amended to expand and extend the
license grants, territory and other rights of Salix set forth in this Agreement to cover and include the license grants, territory and
other rights so reverting to or otherwise coming to be Controlled, directly or indirectly, by Progenics or its Affiliates. In
connection with any acquisition by Salix of rights in respect of Japan pursuant to this Section 2.12, Progenics shall use its good
faith efforts to ensure the transfer and conveyance to Salix of all such rights in Regulatory Approvals, trademarks, trade names
and similar intellectual property rights, rights under Third Party agreements relating to Products or their Development,
Commercialization or Manufacture, and Clinical Data, Know-How and other information relating to Products, in each case
relating to Japan, which Progenics may Control or have the right to transfer or assign or with respect to which Progenics may
reasonably be able to obtain Control or the right to transfer or assign.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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2.13. Other Progenics Products.
(a) New Progenics Opioid-Induced Constipation Product. Progenics agrees that, in the event it or any of its
Affiliates desires to grant a license or similar right to a Third Party in respect of any product or compound (other than the
Compound or Products) that is Developed, or that Progenics or any of its Affiliates intends to Develop or Commercialize or
permit to be Developed or Commercialized, in respect of the diagnosis, treatment or prevention of opioid-induced
constipation (a “New Progenics OIC Product ”), Salix shall have a right of first negotiation with respect to such license, as
follows:
(i) Progenics shall not, and shall cause its Affiliates not to, enter into any agreement or other legally binding
arrangement with any Third Party in respect of the grant of a license or other right by Progenics or any of its Affiliates to permit
the Development or Commercialization of a New Progenics OIC Product without first having complied with the provisions of
this Section 2.13.
(ii) In the event Progenics or any of its Affiliates should propose to grant any such license or other right,
Progenics shall notify Salix of the proposed grant (the “ License Notice ”). Salix may exercise its right of first negotiation in
respect of such proposed grant by means of notice given to Progenics within [*] ([*]) days of the date of the License Notice.
(iii) In the event Salix provides timely notice of its exercise of its right of first negotiation, then for a period of
[*] ([*]) days beginning on the date of the License Notice, the Parties shall negotiate in good faith in respect of the terms upon
which the proposed license might be granted by Progenics to Salix. During such [*] ([*]) day period, Progenics shall negotiate
exclusively with Salix and shall not pursue negotiations with, nor provide information regarding the licensing opportunity to,
any other Person.
(iv) If (A) Salix does not provide timely notice of its exercise of its right of first negotiation or (B) the Parties are
unable to conclude an agreement in respect of such license during the [*] ([*])-day period specified in Section 2.13(a)(iii) and, in
the case of this clause (B), Salix does not notify Progenics that it wishes to continue negotiations with Progenics, Progenics
shall then be free to pursue and enter into agreements with Third Parties and Salix shall have no further rights in respect of such
New Progenics OIC Product.
(v) If the Parties do negotiate pursuant to Section 2.13(a)(iii) but are unable to conclude an agreement in respect
of such license during the [*] ([*])-day period specified in Section 2.13(a)(iii) and Salix notifies Progenics that it wishes to
continue negotiations with Progenics, then the Parties shall continue to negotiate in good faith but
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
32
Progenics shall be free from and after the end of such [*] ([*])-day period to negotiate and enter into agreements with Third
Parties on terms no less favorable to Progenics, as a whole and using consistent methodology and taking into account the
capabilities and resources and expected performance of Salix and such Third Party, than those offered by Salix; provided,
however, that if Progenics does not enter into an agreement within [*] ([*]) months after the date of the License Notice, then
Progenics must, after such date, provide Salix with a new License Notice and must again fulfill the other requirements of this
Section 2.13(a) if it or any of its Affiliates desires to grant a license or other right to a Third Party to permit the development or
commercialization of such New Progenics OIC Product. Progenics shall provide to Salix the same data and information package
relating to any licensing opportunity that is the subject of a License Notice as it provides to any Third Party in respect of such
opportunity.
(b) Other New Progenics Products . Progenics agrees that, if at any time prior to a Change in Control of Salix,
Progenics or any of its Affiliates desires to grant a license or similar right to a Third Party in respect of any product or
compound (other than the Compound or Products) that is not a New Progenics OIC Product, it shall provide Salix with notice
and information in respect of such product or compound reasonably in advance of granting such license or similar right to a
Third Party and, at Salix’s request, shall provide Salix with an opportunity to propose and discuss a potential licensing or
collaboration arrangement between Progenics and Salix in respect of such product or compound. Nothing in this clause
(b) shall obligate Progenics to enter into any agreement with Salix in respect of any product or compound addressed hereby
or condition or delay Progenics’s right to pursue discussions with any other Person in respect of a license or similar right in
respect of any product or compound as to which it may have provided a notice to Salix hereunder.
3. GOVERNANCE OF COLLABORATION
3.1. Joint Committees.
(a) Creation . Within [*] ([*]) days following the Effective Date, the Parties shall establish a Joint Steering
Committee (“ JSC ”) to oversee, review and coordinate the Development, Manufacture and Commercialization of Products in
the Territory and a Joint Development Committee (“ JDC ”) to oversee, review and coordinate the Development of Products
in the Territory (each of the JSC and JDC, a “ Committee ”, and collectively, the “ Committees ”). The Committees shall serve
solely as a forum for the regular exchange of information between the Parties and shall have no authority to bind, or limit the
rights of, either Party.
(b) Functions of JSC . Without limiting Section 3.1(a) or any other functions the Parties agree to delegate to the
JSC, the JSC shall:
(i) consider [*];
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
33
(ii) review [*] and [*];
(iii) review and approve [*] and [*], and seek to [*];
(iv) discuss and approve [*] and [*];
(v) review [*];
(vi) discuss and analyze any [*] or [*];
(vii) decide whether [*];
(viii) establish [*] or [*];
(ix) discuss and consider from time to time as appropriate [*]; and
(x) otherwise facilitate [*] between [*].
(c) Functions of JDC . Without limiting Section 3.1(a) or any other functions the Parties agree to delegate to the
JDC, the JDC shall:
(i) establish [*];
(ii) review [*];
(iii) review and discuss [*];
(iv) review and approve [*];
(v) review [*];
(vi) establish [*];
(vii) if the JSC determines it is advisable to [*], establish [*];
(viii) facilitate the exchange of [*];
(ix) support [*]; and
(x) provide [*].
3.2. Membership. Each of the JSC and JDC shall be comprised of [*] ([*]) representatives from each of Salix and Progenics,
selected by such Party. Each of Salix and Progenics may replace either or both of its representatives on such Committees at any
time by providing prior notice to the other Party. Other representatives of Salix or Progenics may attend
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
34
Committee meetings as non-voting attendees; provided that such representatives are bound by obligations of confidentiality
and non-use with respect to any Confidential Information disclosed in the course of such meetings at least as stringent as those
set forth in this Agreement.
3.3. Committee Meetings. Each Committee shall meet (a) quarterly until [*] ([*]) [*] after the Effective Date and thereafter
[*] and (b) as otherwise determined by the chairperson. Such meetings shall be joint meetings of the Committees if so requested
by the chairperson, and shall be conducted in person or by videoconference or teleconference. In-person meetings shall [*]. A
quorum of the Committee shall exist whenever there is present at or participating in a meeting at least one representative
appointed by each Party. Each Party shall bear its own personnel and travel costs and expenses relating to Committee meetings.
Each Committee shall follow such other administrative procedures as it may adopt for the efficient conduct of its meetings and
other matters.
3.4. Committee Officers; Minutes.
(a) Salix shall select one of its representatives on each Committee to be the chairperson of such Committee. The
chairperson shall call meetings of the Committee no less frequently than contemplated by Section 3.3, prepare and circulate
an agenda for each meeting reasonably in advance (have due regard to any relevant circumstances) of such meeting, and
chair all meetings of the Committee. The chairperson may, in his or her absence, delegate responsibility for chairing meetings
of the Committee to the other Salix representative on such Committee.
(b) Progenics shall select a secretary to prepare and circulate the meeting agendas and minutes. Such minutes shall
be distributed in draft form not later than [*] ([*]) days following each meeting and shall be deemed accepted and effective
unless Salix has objected to the same within [*] ([*]) days of its receipt of such minutes. Any such objection shall be noted in
the minutes. Final minutes shall be promptly distributed to the Parties.
3.5. Decision-Making.
(a) For the avoidance of doubt, neither Committee shall have the power to amend the terms of this Agreement,
which amendment may occur only in compliance with the procedures set forth in Section 13.7.
(b) The members of each Committee shall endeavor to reach a consensus on all decisions within its jurisdiction. All
official actions, decisions or rulings of each Committee must be made by a consensus of the members of the Committee or in a
writing signed by at least one Committee representative of each Party.
(c) If the members of either Committee cannot reach consensus with respect to any action, decision or ruling within
[*] ([*]) days (or such shorter time as may be
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
35
reasonable under the circumstances) following the day that such Committee first considers such matter, then the issue shall
be finally and definitively resolved by the chairperson of such Committee; provided, however, that in the event that the
matter for which consensus is not reached relates to an action or proposed amendment of the Commercialization Plan or the
Development Plan that would have the effect of making the Commercialization Plan inconsistent with the Initial
Commercialization Outline or the Development Plan inconsistent with the Initial Development Outline, as applicable, then the
issue shall not be finally and definitively resolved by the chairperson but instead shall be finally and definitively resolved
according to the procedures set forth in Section 13.12 hereof.
3.6. Sunset Provision. The Parties acknowledge that the utility and roles of the Committees may evolve over the course of
the Term and that it is appropriate that such evolution be addressed by modifications to the role and operation of the
Committees contemplated in Sections 3.1 through 3.5. For such purpose, either Party may, at any time following the [*] of the
Effective Date, propose by notice to the other Party that some or all of the operations of the Committee(s) be terminated or
modified or the frequency of its meetings be reduced. Upon the giving of any such notice, the Parties shall discuss and act
upon it in good faith and shall, in respect thereof, make such amendments to this Article 3 as may be necessary to reflect their
agreement.
3.7. Oversight by Senior Executives . In addition to and separate from the Committees provided for in Sections 3.1 through
3.6, each of Progenics and Salix shall designate a senior executive officer to oversee matters relating to the Collaboration on
behalf of such Party, to facilitate communications between the Parties (including discussion and planning relating to [*] and the
[*] and [*] of [*], to address any matters as to which the JSC and JDC consultative process has proved unsatisfactory, to be
available to consult with his/her counterpart at the other Party, and generally to manage the Collaboration so as to most
effectively achieve its intent and purposes. Such officers shall be, for Progenics: [*], and for Salix: [*].
4. DEVELOPMENT
4.1. Development Plan. An outline of the Development activities to be performed by Salix under this Agreement is set forth
in Schedule 4.1 (the “ Initial Development Outline ”). Within [*] ([*]) days following the Effective Date, Salix shall prepare a
detailed development plan (the “ Development Plan ”) for the continued Development of Products for the Territory. Such
Development Plan shall be consistent with the Initial Development Outline, including all timelines set forth therein, and shall set
forth the objectives and planned tasks for the Development of Products for the Territory. Progenics shall have the right to
review and provide comments to Salix with respect to such Development Plan. Salix shall consider Progenics’s comments in
good faith. Salix shall notify Progenics of any material changes to the Development Plan prior to implementation of such
changes and shall consider in good faith Progenics’s comments with respect thereto. Notwithstanding the preceding sentence,
Salix shall not make any change to the Development Plan that would have the effect of making the Development Plan
inconsistent with the Initial Development Outline except following consultation with Progenics through the Committees and
subject to Section 3.5(c).
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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4.2. Development Responsibilities of Salix.
(a) Costs. Except as contemplated by Section 4.6(c), Salix shall pay one hundred percent (100%) of the costs to
Develop Products for the Territory.
(b) Responsibilities. Salix shall be solely responsible for, and shall:
(i) use Commercially Reasonable Efforts to Develop the Compound and Products in accordance with the
Development Plan, including the performance of the work under the Development Plan in accordance with the estimated
timelines set forth therein;
(ii) undertake all required correspondence and any official communications (except where Progenics may be
required by Applicable Law or Regulatory Authority to communicate) regarding Products with Regulatory Authorities in the
Territory;
(iii) determine, in Salix’s sole discretion, whether or the manner in which to perform any Phase 4 Clinical Trials
for any Product, including any Phase 4 Clinical Trials that may be required by Regulatory Authorities in the Territory, and
thereafter conduct and manage any such Phase 4 Clinical Trials.
(c) Development Coordination.
(i) Progenics shall conduct such Development tasks as Salix may request it to perform as part of the
Development of Products hereunder, subject to such reasonable compensation and other terms as the Parties may agree. For
the avoidance of doubt, the provisions of this Section 4.2(c)(i) do not limit or qualify the provisions of Sections 2.10 and 3.3,
and no compensation or reimbursement of expenses shall be payable by Salix to Progenics in connection with Progenics’s
participation in the Committees.
(ii) Except as contemplated by Section 4.2(c)(i), Progenics shall not conduct, nor shall it permit any of its
Affiliates or, except to the extent required by the provisions of the Ono Agreement as they exist on the Effective Date or as
amended in accordance with the provisions of this Agreement, licensees or sublicensees (other than Salix) to conduct, any
Development with respect to Products except in accordance with a plan that has been approved by the JSC.
(iii) Each Party shall use, and shall cause its Affiliates and, in the case of Progenics, subject to the provisions
of the Ono Agreement as they exist on the Effective Date or as amended in accordance with the provisions of this Agreement,
licensees and Sublicensees (other than the other Party) to use, reasonable efforts consistent with those prevailing in the
pharmaceutical industry to conduct all clinical trials, non-clinical safety studies and all other Development activities relating to
the Compound or Products in such a manner as not to affect adversely the regulatory and commercial potential of Products.
37
(d) Efforts. Salix’s obligations under Section 4.2(b) to use Commercially Reasonable Efforts in Development of
Products will be satisfied if Salix uses Commercially Reasonable Efforts in the Human Field in the Major Market Countries.
Salix shall not be in breach of its obligation under Section 4.2(b) for failing to use Commercially Reasonable Efforts in the
Non-Human Animal Field, in countries other than the Major Market Countries, or in any country other than the United States
in respect of which Salix despite its good faith efforts is unable to enter into a Sublicense as a result of the minimum
Sublicense Revenue requirements set forth in clause (ii)(C) of Section 2.2(c). Furthermore, Salix shall be relieved of its
obligation to use Commercially Reasonable Efforts in any particular country with respect to a particular Product if a Third
Party Controls Patent Rights as to which, in the written reasoned opinion of Salix’s outside patent counsel (which written
opinion shall be reasonably acceptable to Progenics), there is a reasonable risk that a court would find the making, using or
selling of such Product in such country to constitute an infringement and Salix or its Affiliates or Sublicensee(s) are unable to
obtain a license under such Patent Rights on commercially reasonable terms or configure the Product so as to avoid
infringement through the use of Commercially Reasonable Efforts.
(e) Unforeseen Events . The Parties recognize that the Development Plan and the objectives to be set forth therein
are based upon numerous assumptions which are not in the control of the Parties. In view of the numerous assumptions
underlying the Development Plan, the proposed timeframe for achieving the objectives and events described in the
Development Plan will be regularly reviewed by the JDC in light of unforeseen matters. In the event that despite the use of
Commercially Reasonable Efforts by the Parties, [*], or other issues beyond the control of the Parties arise that prevent either
Party from fulfilling the objectives of the Development Plan within the timeframe set forth in the Development Plan, the JDC
will discuss any appropriate revisions to the Development Plan, which revisions the other Party shall not unreasonably
oppose, provided that the Party can demonstrate its use of Commercially Reasonable Efforts to Develop the Products.
4.3. Records. Salix and its Affiliates shall maintain, and shall use Commercially Reasonable Efforts to cause (a) their
Outside Contractors to maintain and (b) Salix’s Sublicensees to cause such Sublicensees’ respective Outside Contractors to
maintain, accurate and complete records of all activities related to the Development of Products, consistent with the
responsibilities of Salix under this Agreement, and all results of any trials, studies and other investigations conducted under
this Agreement by or on behalf of Salix, its Affiliates, Sublicensees and Outside Contractors, as applicable.
4.4. Reports on Development.
(a) For so long as Salix continues to Develop a Product under this Agreement, it shall in respect of such Product
provide the JDC with reports containing
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
38
relevant information in reasonable detail regarding [*] and [*], [*], and [*] related to Registrational Filings and Clinical Trials
of such Product conducted or overseen by Salix and its Affiliates and Sublicensees. Such reports shall be provided by Salix
to the JDC as and when such reports are produced by or made available to Salix for its internal use.
(b) In addition, through its representatives on the JSC, each Party shall make reports to the JSC, as and at such time
as such reports are produced by or made available to such Party for its internal use and otherwise on a periodic basis,
updating the JSC as to the status and results of Development efforts of such Party and its licensees and Sublicensees (other
than, in the case of Progenics, Salix and, in the case of Salix, Progenics) with respect to Products.
4.5. Transfer of Data. Without limiting the provisions of Sections 2.9(a) or 12.5(b), as soon as reasonably practicable, but
in any event within [*] ([*]) days, following the Effective Date, Progenics shall, at its expense, provide Salix with access to, and
(to the extent requested by Salix) copies of, all [*] and [*] relating to the Compound and Products to the extent the same is in the
possession or Control of Progenics or its Affiliates. In addition, Progenics shall use Commercially Reasonable Efforts to cause
Wyeth and Ono to provide, for delivery to Salix, relevant [*] and [*] which Wyeth and Ono are obligated, under the Wyeth
Agreement, the Termination Agreement, and the Ono Agreement, respectively, to provide to Progenics. The provisions of this
Section 4.5 are in addition to, and not by way of limitation of, the provisions of the Transition Agreement.
4.6. Ongoing Development Work.
(a) Subject to Ono’s rights under the Ono Agreement and the Initial Development Outline, all ongoing
Development work in respect of the Compound or Products that is being conducted by the Progenics Parties or their
Affiliates or licensees as of the Effective Date, including any pre-clinical or clinical studies and Clinical Studies (as such term
is defined in Section 9.2(p)) identified on Schedule 9.2(p) , shall either, as Salix may direct by notice to the Progenics Parties,
be continued, terminated or transferred and transitioned to Salix.
(b) Subject to the provisions of Section 4.6(c), all ongoing Development work continued by the Progenics Parties
as aforesaid and any termination or transfer and transition of ongoing Development work effected pursuant to Section 4.6(a)
shall be at [*] sole cost and expense at the relevant [*] or the [*], as applicable.
(c) In respect of any ongoing Development work continued by the Progenics Parties as to which the Progenics
Parties continue to have the right to receive reimbursement from Wyeth pursuant to the Termination Agreement, the
Progenics Parties shall remain responsible for all costs and expenses of such Development work up to the amount of
reimbursement that Wyeth is obligated to pay to the Progenics Parties in respect
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
39
thereof under the terms of the Termination Agreement. Salix shall be responsible, in accordance with Section 4.6(b), for any
and all amounts in excess of such amounts that are reimbursable by Wyeth. In the event that the Progenics Parties should be
unable to collect from Wyeth, because of Wyeth’s bankruptcy or insolvency, any amount that Wyeth is required to
reimburse to the Progenics Parties under the Termination Agreement for Development work that has been conducted by the
Progenics Parties as contemplated by the first sentence of this Section 4.6(c), then Salix shall pay such amount to the
Progenics Parties and shall, by virtue of such payment, be subrogated to any rights that the Progenics Parties may have
against Wyeth in respect of the amount so paid.
(d) Each Progenics Party shall reasonably cooperate with Salix to effect the transfer and termination of any ongoing
Development work that Salix directs is to be transferred and transitioned to it. Without limitation, each Progenics Party shall
use its reasonable efforts to assign and delegate to Salix or its Affiliates, as Salix may direct, all of the rights and obligations
of the Progenics Party or its Affiliates or licensees, as the case may be, under such Progenics Third Party Agreements (other
than the Subject Agreements) as Salix may determine are relevant to the conduct of ongoing Development work to be
transferred and transitioned to it. The Progenics Parties and Salix shall use their respective reasonable efforts to obtain the
consent of any relevant Third Party to the assignment and delegation of any such Progenics Third Party Agreement. In
connection with obtaining any such consents, Salix shall cooperate with the Progenics Parties in obtaining from the relevant
Third Party a release of the relevant Progenics Parties from liability under the relevant Progenics Third Party Agreement with
respect to matters arising after the relevant assignment effective date, and, notwithstanding and in addition to the foregoing,
shall, at Salix’s expense, cause the relevant Progenics Parties to be released from liability under the Progenics Third Party
Agreements identified on Schedule 4.6(d) with respect to matters arising after or related to the relevant assignment effective
date. To the extent any such Progenics Third Party Agreement is not assignable without the consent of a Third Party and the
consent of such Third Party cannot be obtained following the reasonable efforts contemplated hereby, the performance
obligations of the Progenics Parties or their Affiliates under such Progenics Third Party Agreement shall, unless not
permitted by such Progenics Third Party Agreement, be deemed to be subcontracted to Salix until such Progenics Third Party
Agreement can be effectively assigned and delegated. If any such consent cannot be timely obtained, (i) the Progenics
Parties shall waive any exclusivity provision contained in the relevant Progenics Third Party Agreement to allow Salix to
enter into its own agreement with the relevant Third Party and (ii) the Progenics Parties and Salix shall cooperate in any
reasonable arrangement designed to provide for Salix the benefits and obligations intended to be assigned or delegated to
and assumed by it in respect of such Progenics Third Party Agreement, including the right to enforce such Progenics Third
Party Agreement for its own account. In furtherance of the foregoing, in respect of any Progenics Third Party Agreement that
cannot be effectively assigned or delegated as contemplated hereby, the Progenics Parties hereby consent to the use by any
Third Party which is a party to such Progenics Third Party Agreement of confidential information, technology and/or Know-
How developed or held by such Third Party under the Progenics Third Party Agreement for the benefit of Salix, subject to
applicable confidentiality and use restrictions. Notwithstanding any of the foregoing provisions of this Section 4.6(d), the
Progenics Parties shall not be obligated to take or to permit to be taken any action which would, in the reasonable judgment
of the Progenics Parties, be likely to result in a breach of any Progenics Third Party Agreement.
40
(e) Any transfer or transition of ongoing Development work from Progenics or its Affiliates or licensees to Salix
pursuant to this Section 4.6 shall not affect the liability of the transferring party for any matters arising prior to the effective
date of such transfer, and Salix shall have no liability in respect of any such matter. Conversely, any such transfer or
transition shall result in Salix, as between it and the transferring party, being liable for all matters arising in respect of such
Development work on or after the effective date of such transfer, provided, however, that, as between Salix and the
transferring party, the transferring party shall remain solely liable for any matters arising before or after such transfer in
respect of Development work transferred by the transferring party to Salix to the extent any such matter is a result of any act
or omission on the part of the transferring party, its Affiliates, licensees, sublicensees or its or their directors, officers,
employees or agents.
(f) The provisions of this Section 4.6 are in addition to, and not by way of limitation of, the provisions of the
Transition Agreement.
5. COMMERCIALIZATION
5.1. Salix’s Commercialization Responsibilities and Efforts.
(a) Commercialization Plan. An outline of the Commercialization activities to be performed by Salix under this
Agreement is set forth in Schedule 5.1(a) (the “ Initial Commercialization Outline ”). Within [*] ([*]) days following the
Effective Date, Salix shall prepare the Commercialization Plan for the continued Commercialization of Products for the
Territory. Such Commercialization Plan shall be consistent with the Initial Commercialization Outline, including all timelines
set forth therein, and shall set forth the objectives and planned tasks for the Commercialization of Products for the Territory.
Progenics shall have the right to review and provide comments to Salix with respect to such Commercialization Plan. Salix
shall consider Progenics’s comments in good faith. Salix shall notify Progenics of any material changes to the
Commercialization Plan prior to implementation of such changes and shall consider in good faith Progenics’s comments with
respect thereto. Notwithstanding the preceding sentence, Salix shall not make any change to the Commercialization Plan that
would have the effect of making the Commercialization Plan inconsistent with the Initial Commercialization Outline except
following consultation with Progenics through the Committees and subject to Section 3.5(c). Costs. Salix shall pay one
hundred percent (100%) of the costs to Commercialize Products in the Territory.
(b) Responsibilities. Salix shall be solely responsible for the Commercialization of the Products in the Territory and
shall use Commercially Reasonable Efforts to pre-launch, launch, promote, market, distribute, sell in finished pharmaceutical
form, and otherwise Commercialize Products in the Territory in accordance with the
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
41
Commercialization Plan. Salix shall be solely responsible for distribution and pricing of Products in the Territory, either itself
or through its Sublicensees, and shall itself or through its Sublicensees book all sales of Products in the Territory.
(c) Efforts. Salix’s obligations under this Section 5.1 to use Commercially Reasonable Efforts will be satisfied if Salix
uses Commercially Reasonable Efforts in the Human Field in Major Market Countries. Commercially Reasonable Efforts
expended by a Sublicensee in a given country shall satisfy Salix’s efforts obligations in that country. Salix shall not be in
breach of its obligation under this Section 5.1 for failing to use Commercially Reasonable Efforts in the Non-Human Animal
Field, in countries other than the Major Market Countries, or in any country other than the United States in respect of which
Salix despite its good faith efforts is unable to enter into a Sublicense as a result of the minimum Sublicense Revenue
requirements set forth in clause (ii)(C) of Section 2.2(c). Furthermore, Salix shall be relieved of its obligation to use
Commercially Reasonable Efforts with respect to a Product in any particular country if a Third Party Controls Patent Rights as
to which, in the written reasoned opinion of Salix’s outside patent counsel (which written opinion shall be reasonably
acceptable to Progenics), there is a reasonable risk that a court would find the making, using or selling of such Product in
such country to constitute an infringement and Salix or its Affiliates or Sublicensee(s) are unable to obtain a license under
such Patent Rights on commercially reasonable terms or configure the Product so as to avoid infringement through the use of
Commercially Reasonable Efforts.
5.2. Transition; Supply.
(a) Transition Agreement. Simultaneously herewith, the Expanded Parties are entering into a Transition
Arrangements Agreement, of even date herewith (the “ Transition Agreement ”).
(b) Supply. Except as otherwise contemplated by the Transition Agreement, Salix shall be solely responsible at its
expense for the Manufacture and supply of one hundred percent (100%) of the Compound and finished Products for
Development and Commercialization both as bulk API and as finished and packaged products.
(c) Manufacturing and Transfer of Manufacturing Know-How. Progenics will disclose to Salix, Salix’s Affiliates,
and/or Salix’s Third Party contract manufacturer all relevant Progenics Know-How and all Know-How included in the Wyeth
Collaboration Know-How, Wyeth Collaboration Joint Know-How, Ono Collaboration Know-How and Ono Collaboration
Joint Know-How relating to the Manufacture of the Products. Progenics shall use its Commercially Reasonable Efforts to
cause Wyeth to provide Salix with that cooperation, inventory, technology, know-how and documentation set forth in
Section 10.4.1(d) of the Wyeth Agreement. Such Know-How disclosure shall include the transfer of data and information
stored on the computer systems of Progenics for and in respect of Regulatory Marketing Approval for Products.
(d) Assignment of Supply and Manufacturing License Agreements. At Salix’s written request in connection with
the transfer of responsibility for Manufacture under Section 5.2(c), Progenics shall use Commercially Reasonable Efforts to
promptly
42
assign and transfer to Salix any existing supply agreements related to the supply of the Compound or the Products.
Furthermore, to the extent necessary to permit Salix to manufacture the Compound and Products as contemplated by this
Agreement, Progenics shall use Commercially Reasonable Efforts to sublicense to Salix any license agreement under which
Progenics licenses any intellectual rights from any Third Party related to the Manufacture of the Compound or the Products.
If the terms of any of the agreements referred to in the previous two sentences require the consent of the other party thereto
to effect its assignment, then upon Salix’s request for an assignment, until Progenics is able to obtain such consent and
effect such assignment, Progenics will exercise its rights under such agreements for the benefit of Salix and as reasonably
requested by Salix. In the event of any assignment to Salix under this Section 5.2(d), Salix shall assume full responsibility for
satisfying all obligations of Progenics under any assigned agreement to the extent arising after such assignment and
assumption. Notwithstanding any of the foregoing provisions of this Section 5.2(d), Progenics shall not be obligated to take
or permit to be taken any action which would, in the reasonable judgment of Progenics, be likely to result in a breach of any
such supply agreements.
5.3. Marketing Materials and Corporate Branding. Subject to Section 7.5, Salix shall be solely responsible at its expense
for all pre-marketing and marketing efforts and for creating all packaging and Promotional Materials for the Products in the Field
in the Territory. Salix shall own all copyrights in such Promotional Materials. Subject to Progenics’s reasonable approval of the
form and presentation thereof, the corporate name and logo of Progenics shall appear on all Product packaging, package inserts
and Promotional Materials Manufactured, distributed or sold by Salix, its Affiliates and Sublicensees hereunder or pursuant
hereto, subject, in each case, to compliance with Applicable Law and regulatory requirements.
5.4. Sharing of Information. Salix shall provide the JSC with a copy of Salix’s Commercialization Plan for any Product and
any updates thereof, including information regarding [*] and [*] of the Product, [*] and [*]. Such updates shall be provided by
Salix to the JDC as and when such reports are produced by or made available to Salix for its internal use. Salix shall report to the
JSC at each meeting thereof and at such other times as appropriate on the progress of its implementation of the
Commercialization Plan. All commercial information so disclosed by Salix shall be Salix’s Confidential Information for the
purposes of Section 8.2.
5.5. Unauthorized Sales .
(a) Unauthorized Sales by Salix. Salix (i) shall, and shall cause its Affiliates and Sublicensees to, distribute, market,
promote, offer for sale and sell Products only in the Field in the Territory and (ii) shall not, shall not permit its Affiliates to,
and shall make reasonable efforts to cause its Sublicensees not to, distribute, market, promote, offer for sale or sell Products
(A) to any Person in fields of use and countries other than those as specified in the preceding clause (i) or (B) to any Person
in the fields of use and countries as specified in the preceding clause (i) that Salix, its Affiliates or Sublicensees, as
applicable,
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
43
knows (y) is likely to distribute, market, promote, offer for sale or sell Products in fields of use and countries other than those
as specified in the preceding clause (i) or assist another Person to do so, or (z) has directly or indirectly distributed, marketed,
promoted, offered for sale or sold Products in fields of use and countries other than those as specified in the preceding
clause (i) or assisted another Person to do so. If Salix or its Affiliates receives any orders for Products for fields of use and
countries other than those specified in clause (i) of the first sentence of this Section 5.5(a), it shall promptly refer such orders
to Progenics, and Salix shall make reasonable efforts to cause any Sublicensee that receives such an order to refer such order
to Progenics. In addition, neither Salix nor its Affiliates shall sell or otherwise provide, directly or indirectly, Products to any
Sublicensee or distributor in excess of amounts reasonably required to meet local demand in the country or other territory in
respect of which the Sublicensee or distributor is authorized to distribute, market, promote, offer for sale or sell Products, and
Salix shall make reasonable efforts to prevent its Sublicensees from doing the same.
(b) Unauthorized Sales by Progenics. Progenics shall, and shall cause its Affiliates to, distribute, market, promote,
offer for sale and sell Products only outside the Territory or for use outside the Field. Progenics shall not, and shall not
permit its Affiliates to, distribute, market, promote, offer for sale or sell Products (i) to any Person other than outside the
Territory or for use outside the Field or (ii) to any Person that Progenics or its Affiliates, as applicable, knows (A) is likely to
distribute, market, promote, offer for sale or sell Products for use in the Field in the Territory or assist another Person to do
so, or (B) has directly or indirectly distributed, marketed, promoted, offered for sale or sold Products for use in the Field in the
Territory or assisted another Person to do so. If Progenics or its Affiliates receives any orders for Products for use in the
Field in the Territory, it shall promptly refer such orders to Salix. In addition, neither Progenics nor its Affiliates shall sell or
otherwise provide, directly or indirectly, Products to any licensee or distributor in excess of amounts reasonably required to
meet local demand in the country or other territory in respect of which the licensee or distributor is authorized to distribute,
market, promote, offer for sale or sell Products.
(c) Certain Limitations. The provisions of this Section 5.5 shall apply only to the extent permitted by Applicable
Law. To the extent any provision of this Section 5.5 shall be found in any jurisdiction to be in violation of public policy or
illegal or unenforceable in law or equity, the provisions of Section 13.5 shall apply.
6. PAYMENTS BY SALIX TO PROGENICS
6.1. Upfront License Fee Payment. Salix shall pay to Progenics upon the execution of this Agreement sixty million dollars
($60,000,000) as a one-time, nonrefundable and noncreditable license fee in partial consideration for the licenses granted under
Section 2.1 hereof. Such amount shall be paid within five (5) Business Days after receipt by Salix of an invoice from Progenics.
44
6.2. Development Milestone Payments.
(a) In partial consideration for the licenses granted to Salix under Section 2.1 hereof, Salix shall pay to Progenics
upon the satisfaction of the specified conditions the following one-time, nonrefundable, and noncreditable payments (“
Development Milestone Payments ”) within five (5) Business Days of receipt by Salix of an invoice for the payment of the
applicable Development Milestone Payment as set forth in this Section 6.2. Each Development Milestone Payment is payable
one time only, regardless of the number of Products or indications for which the condition is satisfied. For the avoidance of
doubt, the maximum aggregate value of all Development Milestone Payments is ninety million dollars ($90,000,000).
Condition Payment
[*] $ [*], [*]
[*] $ [*], [*]
(b) In the event that the specified condition for the Development Milestone Payment in respect of the [*] as
specified above is achieved [*].
(c) In the event that the specified condition for the Development Milestone Payment in respect of the [*] as
specified above is achieved [*].
6.3. Commercialization Milestone Payments. In partial consideration for the licenses granted to Salix under Section 2.1
hereof, Salix shall pay to Progenics upon the satisfaction of the specified conditions the following one-time, nonrefundable, and
noncreditable payments (“ Commercialization Milestone Payments ”) within [*] ([*]) Business Days of receipt by Salix of an
invoice for the payment of the applicable Commercialization Milestone Payment. Each Commercialization Milestone Payment is
payable one time only, regardless of the number of times the condition is satisfied. For the avoidance of doubt, the maximum
aggregate value of all Commercialization Milestone Payments is two hundred million dollars ($200,000,000), and up to all six
(6) payments could be made with respect to a single Calendar Year.
Condition Payment
[*] $ [* 1 ]
[*] $ [*]
[*] $ [*]
[*] $ [*]
[*] $ [*]
[*] $ [*]
1
For the avoidance of doubt and by way of example, the Commercialization Milestone Payment for the [*].
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
45
6.4. Ex-U.S. Sublicenses and Sales .
(a) When Salix enters into arrangements with one or more Sublicensees relating to any area outside the United
States, Salix shall pay Progenics sixty percent (60%) of all Sublicense Revenues pursuant to any such arrangements.
(b) All payments under this Section 6.4 shall be payable within [*] ([*]) days after receipt of the applicable
Sublicense Revenue by Salix.
(c) For the avoidance of doubt, Section 6.4(a) shall not apply to any sales or other Commercialization of Products
by Salix or its Affiliates, whether inside or outside the United States.
6.5. Royalty Payments.
(a) Royalties. In partial consideration for the licenses granted to Salix under Section 2.1, Salix shall pay to Progenics
royalties in the amount of the applicable Net Sales percentage (as set forth below) (the “ Applicable Net Sales Percentage ”)
of the Net Sales made during the Royalty Period by Salix and its Affiliates, whether inside or outside the United States, as
follows:
Applicable
Net Sales
Combined Net Sales of All Products by Salix and its Affiliates Percentage
[*] [*]%
[*] [*]%
[*] [*]%
(b) Royalty Period .
(i) The royalties payable under Section 6.5(a) shall be payable by Salix only during the Royalty Period in
respect of the relevant Product and country.
(ii) Following the expiration of the Royalty Period in respect of a Product in a country in the Territory, the
license grants to Salix in Section 2.1 in respect of such Product shall, in accordance with Section 2.8, become fully paid-up,
perpetual and irrevocable with respect to such Product and such country and accordingly the Net Sales of the relevant
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
46
Product in such country shall be excluded from the royalty calculations for purposes of Section 6.5(a) and from calculations of
thresholds for Commercialization Milestone Payments for purposes of Section 6.3.
(c) Adjustment of Royalties . If at any time the Royalty Period is continuing solely because of clause (c) of the
definition thereof for a particular Product in a particular country, then the dollar amount of royalties payable in respect of Net
Sales of such Product in such country thereafter during the Royalty Period pursuant to Section 6.5(a) shall be reduced by [*]
percent ([*]%) from the amount which would have been so payable under this Agreement in the absence of this clause (c).
(d) Progenics Third Party Agreements; Third Party Licenses.
(i) Except as otherwise provided in or contemplated by Section 4.6, Progenics shall, as between the Parties, be
solely responsible for all obligations under each Progenics Third Party Agreement unless and until such Progenics Third Party
Agreement is assigned to Salix pursuant to Section 4.6(d) or 9.4(d). In the event that a Progenics Party or any of its Affiliates
fails to pay any amount that it is obligated to pay in respect of a Progenics Third Party Agreement pursuant to the preceding
sentence and Salix makes such payment on behalf of such Progenics Party, then Salix shall be entitled to credit such amount
against any amount owed by Salix to Progenics under this Agreement. Except as otherwise provided herein, Salix shall, as
between the Parties, be solely responsible in respect of all Progenics Third Party Agreements assigned to Salix pursuant to
Sections 4.6(d) and 9.4(d) for any and all obligations arising under such Progenics Third Party Agreements from and after the
date of assignment. In the event that Salix or any of its Affiliates fails to pay any amount that it is obligated to pay in respect of
a Progenics Third Party Agreement pursuant to the preceding sentence and Progenics or one of its Affiliates makes such
payment on behalf of Salix or such Affiliate, then Salix shall promptly reimburse Progenics for the amount paid.
(ii) If, during the Term, Salix or its Affiliates, whether pursuant to Section 7.4(b) or otherwise, enters into an
agreement with a Third Party to license Patent Rights as to which, [*], there is [*] (a “ Third Party License ”), then Salix may
deduct up to [*] percent ([*]%) of the royalties or other payments payable pursuant to such Third Party License actually paid
by Salix or its Affiliates to such Third Party pursuant to the Third Party License from the royalties otherwise due from Salix to
Progenics in respect of Net Sales of the relevant Product(s) under Section 6.5(a) as adjusted pursuant to Section 6.5(c), up to a
maximum amount in respect of the relevant Net Sales for any Quarter that would result in Progenics’s effective royalty rate in
respect of such Net Sales in such Quarter under Section 6.5(a) as adjusted pursuant to Section 6.5(c) for such Product(s) being
reduced by not more than [*] ([*]) percentage points, with any balance then remaining to be carried over to amounts owed by
Salix to Progenics pursuant to Section 6.5(a) in respect of subsequent Quarters and applied against the amounts owed by Salix
to Progenics pursuant to Section 6.5(a) as adjusted pursuant to Section 6.5(c) in respect of such subsequent Quarters, up to a
maximum amount for each Quarter that would result in Progenics’s
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
47
effective royalty rate in respect of each such Quarter under Section 6.5(a) for such Product(s) as adjusted pursuant to
Section 6.5(c) being reduced by not more than [*] ([*]) percentage points. By way of example, if the royalty rate applicable in
respect of the relevant Quarter was [*] percent ([*]%), then the maximum amount in respect of amounts paid by Salix to the
Third Party in respect of the Third Party License that could be deducted from royalties on relevant Net Sales otherwise owed by
Salix to Progenics for such Quarter would be an amount that would reduce Progenics’s effective royalty rate for the Quarter for
the relevant Product(s) to [*] percent ([*]%).
(e) Disclaimers . Each Party acknowledges and agrees that nothing in this Agreement (including, without
limitation, any exhibits or attachments hereto) shall be construed as representing an estimate or projection of either (i) the
number of Products that will or may be successfully Developed or Commercialized or (ii) anticipated sales or the actual value
of any Product. SALIX MAKES NO REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, THAT IT WILL
BE ABLE TO SUCCESSFULLY DEVELOP OR COMMERCIALIZE ANY PRODUCT OR, IF COMMERCIALIZED, THAT ANY
SUCH PRODUCT WILL ACHIEVE ANY PARTICULAR SALES LEVEL, OR THAT, EXCEPT AS EXPRESSLY AGREED IN
THIS AGREEMENT, IT WILL DEVOTE ANY LEVEL OF DILIGENCE OR RESOURCES TO COMMERCIALIZING ANY SUCH
PRODUCT.
6.6. Reports, Payments and Related Matters.
(a) Cumulative Royalties. The obligation to pay royalties under this Agreement shall be imposed only once with
respect to any sale of any Product, regardless of the number of patents that may cover the Product.
(b) Reports and Payments. Within [*] ([*]) days after the first day of each Quarter following the First Commercial
Sale of a Product in the Territory, Salix shall submit to Progenics a written report with respect to the preceding Quarter (the “
Quarterly Activity Report ”) stating: (i) the gross sales and Net Sales of Products sold by Salix and its Affiliates and any
Sublicensee during the Quarter just ended for each country in which sales were made, making reference to the specific
deductions taken in accordance with the definition of Net Sales; (ii) the date of any First Commercial Sale of any Product in a
country in the Territory during the Quarter just ended; (iii) the currency exchange rates used in determining gross sales, Net
Sales and amounts payable under Section 6.5; and (iv) a calculation of the amounts due to Progenics pursuant to Section 6.5
in respect of the Quarter just ended. All royalty payments due under Section 6.5 shall be due and payable within [*] ([*])
Business Days following the distribution of each Quarterly Activity Report. Salix shall submit to Progenics with each
payment under Section 6.4 a written report with respect to such payment (a “ Sublicense Revenue Report ”) describing in
detail the Sublicense Revenue to which such payment relates and providing such other information specified above for
inclusion in a Quarterly Activity Report as may be relevant thereto. The obligation of Salix
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
48
to provide Quarterly Activity Reports and Sublicense Revenue Reports under this Section 6.6(b) shall cease to apply once
Salix has no further obligation to make payments of, respectively, royalties under Section 6.5 or payments under Section 6.4.
(c) Taxes and Withholding. All payments under this Agreement will be made without any deduction or withholding
for or on account of any tax, duties, levies, or other charges unless such deduction or withholding is required by Applicable
Law to be assessed against Progenics. If Salix is so required to make any deduction or withholding from payments due to
Progenics, Salix will (i) promptly notify Progenics of such requirement, (ii) pay to the relevant authorities on Progenics’s
behalf the full amount required to be deducted or withheld promptly upon the earlier of determining that such deduction or
withholding is required or receiving notice that such amount has been assessed against Progenics, and (iii) promptly forward
to Progenics an official receipt (or certified copy) or other documentation reasonably acceptable to Progenics evidencing
such payment to such authorities.
(d) Currency. All payments under this Agreement shall be made in dollars. As applicable, Sublicense Revenue, Net
Sales and any royalty deductions shall be translated into dollars at the exchange rate used by Salix for public financial
accounting purposes in accordance with GAAP.
(e) Record Keeping. Salix shall keep, and shall cause its Affiliates to keep, books and accounts of record in
connection with Sublicense Revenue and the sale of Products in accordance with GAAP and in sufficient detail to permit
accurate determination of all figures necessary for verification of Sublicense Revenue to be shared by Salix with Progenics
under Section 6.4(a) and royalties to be paid under Section 6.5. Salix and its Affiliates shall maintain such records for a period
of at least [*] ([*]) years after the end of the Quarter in which they were generated, provided, however , that if any records are
in dispute and Salix has received notice from Progenics of the records which are in dispute, Salix shall keep such records until
the dispute is resolved.
(f) Audits.
(i) Examination of Books and Records . Upon [*] ([*]) days’ prior notice from Progenics, Salix shall permit an
independent certified public accounting firm, of nationally recognized standing selected by Progenics and reasonably
acceptable to Salix, to examine, at Progenics’s sole expense, the relevant books and records of Salix and its Affiliates, and shall
take reasonable efforts to cause its Sublicensees to permit Progenics to examine the relevant books and records of
Sublicensees, in each case as may be reasonably necessary to verify the amounts reported by Salix in accordance with
Section 6.6(b) and the sharing of Sublicense Revenue under Section 6.4(a) and payment of royalties under Section 6.5 and its
compliance with its other Development and Commercialization obligations hereunder. An examination by Progenics under this
Section 6.6(f) shall occur not more than [*] in any [*] and
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
49
shall be limited to the pertinent books and records for any [*] ending not more than [*] ([*]) months before the date of the
request. The accounting firm shall be provided access to such books and records at Salix’s and other relevant facilit(y/ies)
where such books and records are normally kept and such examination shall be conducted during normal business hours. Salix
may require the accounting firm to sign a standard non-disclosure agreement before providing the accounting firm with access
to relevant facilities or records. Upon completion of the audit, the accounting firm shall, subject to Section 6.6(g), provide both
Salix and Progenics with a written report disclosing any discrepancies in the reports submitted by Salix or the Sublicense
Revenue shared or the royalties paid, and, in each case, the specific details concerning any discrepancies.
(ii) Underpayments/Overpayments. If such accounting firm concludes that additional portions of Sublicense
Revenue were due to Progenics under Section 6.4(a) or additional royalties were due to Progenics under Section 6.5(a), Salix
shall pay to Progenics the additional Sublicense Revenue or royalties, as the case may be, within [*] ([*]) days of the date Salix
receives such accountant’s written report, plus interest, which shall be calculated at the average of the prime rate reported by
JPMorgan Chase, New York City, each month during the period beginning on the day the unpaid amount was due until the
unpaid amount is paid in full, plus [*] percent ([*]%) per annum. If such underpayment exceeds the greater of [*] dollars ($[*])
and [*] percent ([*]%) of the aggregate share of Sublicense Revenue and royalties that were to be paid by Salix to Progenics for
the audited period, Salix also shall reimburse Progenics for the out-of-pocket expenses incurred in conducting the audit.
Progenics shall not reveal to such accounting firm the conditions under which the audit expenses are to be reimbursed
hereunder. If such accounting firm concludes that Salix overpaid Sublicense Revenue or royalties to Progenics, Progenics will
refund such overpayments to Salix within [*] ([*]) days of the date Progenics receives such accountant’s report. [*] interest
shall be due to Salix on any such overpayment.
(g) Confidentiality. All progress reports and financial information of Salix subject to review under this Article 6
shall be deemed to be Salix’s Confidential Information subject to the provisions of Article 8 hereof, and Progenics shall not
disclose such Confidential Information to any Third Party or use such Confidential Information for any purpose other than
reviewing progress made or verifying payments to be made by Salix to Progenics under this Agreement; provided, however ,
that such Confidential Information may be disclosed by Progenics to Third Parties only to the extent necessary to enforce
Progenics’s rights under this Agreement.
6.7. Diagnostic or Veterinary Products . Notwithstanding anything to the contrary in this Article 6, sales of Products for
diagnostic (including screening or monitoring) or veterinary use shall not be considered Net Sales for purposes of Section 6.3 or
6.5 or Sublicense Revenues for purposes of Section 6.4. In the event that Salix Develops or seeks to Sublicense Development of
any Product for any such use, then the Expanded Parties shall negotiate in good faith to agree upon, as a condition to Salix’s
right to Commercialize (whether itself or through a Sublicensee) such Product, appropriate compensation to be paid by Salix to
Progenics in connection with the Commercialization of such Product.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
50
7. INTELLECTUAL PROPERTY.
7.1. Ownership of Intellectual Property.
(a) Inventorship/Authorship. For purposes of this Agreement, (i) inventorship of any invention and any Patent
Right claiming such invention shall be determined in accordance with the rules and guidelines regarding inventorship as
established under United States patent law (including case law and regulations associated therewith); and (ii) authorship of
any work subject to copyright protection shall be determined in accordance with U.S. copyright law. Without limiting the
foregoing, each Expanded Party shall own all right, title and interest in and to all Patent Rights, Know-How, or copyright
materials created solely by or on behalf of such Party.
(b) Ownership of Joint Technology and Joint Copyrights. As between the Progenics Parties, on the one hand, and
Salix, on the other hand, each shall own an equal, undivided interest in any Joint Technology and any copyright materials
authored jointly by employees or agents of Progenics or any of its Affiliates and employees or agents of Salix or any of its
Affiliates.
(c) Exploitation of Joint Technology and Joint Copyrights. Except as expressly provided in this Agreement neither
Party shall exploit any Joint Technology inside or outside the Territory without the prior written approval of the other Party.
Neither Party shall exploit any copyright materials authored jointly by employees or agents of Progenics or any of its
Affiliates and employees or agents of Salix or any of its Affiliates without the prior written approval of the other Party except
in connection with the Manufacturing, Development or Commercialization of the Compound and Products in the Territory as
contemplated hereby.
7.2. Patent Prosecution.
(a) Progenics Patent Rights, Wyeth Collaboration Patent Rights, Wyeth Collaboration Joint Patent Rights and
Ono Collaboration Joint Patent Rights. Using counsel selected by Salix after good faith consultation with Progenics [*],
Salix shall use Commercially Reasonable Efforts to prepare, file, prosecute and maintain, at Salix’s expense, the Progenics
Patent Rights as to which Progenics has the right to control prosecution and maintenance, Wyeth Collaboration Patent
Rights, Wyeth Collaboration Joint Patent Rights and Ono Collaboration Joint Patent Rights (including provoking, instituting
or defending interference, opposition, revocation, reexamination and similar proceedings related to the Progenics Patent
Rights as to which Progenics has the right to control prosecution and maintenance, Wyeth Collaboration Patent Rights,
Wyeth Collaboration Joint Patent Rights
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
51
and Ono Collaboration Joint Patent Rights) in all countries in the Territory where such Patent Rights are currently pending
and, respecting the [*]. In respect to any Progenics Patent Rights as to which Progenics does not have the right to control
prosecution and maintenance of such Patent Rights, Progenics (i) shall ensure that Salix is promptly provided with all such
information as Progenics may receive in respect of the prosecution and maintenance of such Patent Rights and with a full
opportunity to participate in any consultations that may take place between Progenics and any Third Party holding the right
to pursue prosecution and maintenance of such Patent Rights and (ii) shall exercise such rights as it does have in respect of
the prosecution and maintenance of such Patent Rights in accordance with Salix’s directions. The Parties shall cause their
respective patent counsel to communicate no less frequently than [*] per [*] regarding the prosecution and maintenance of
the Progenics Patent Rights, Wyeth Collaboration Patent Rights, Wyeth Collaboration Joint Patent Rights and Ono
Collaboration Joint Patent Rights. Without limiting the generality of the foregoing, Salix shall provide to Progenics copies of
all communications sent to and received from any patent office pertaining to Progenics Patent Rights, Wyeth Collaboration
Patent Rights, Wyeth Collaboration Joint Patent Rights or Ono Collaboration Joint Patent Rights, including [*]. Whenever
possible, Progenics shall be given at least [*] ([*]) Business Days prior to the earlier of the expiration of any shortened
statutory period for response or anticipated filing to review and comment upon the text of any such communication. Salix
shall also keep Progenics advised on the maintenance of any patents included within the Progenics Patent Rights, Wyeth
Collaboration Patent Rights, Wyeth Collaboration Joint Patent Rights and Ono Collaboration Joint Patent Rights and provide
Progenics with reasonable opportunity to comment on maintenance. In the event that the Parties’ respective patent counsel,
after good faith discussions, cannot agree with respect to any decision to be made with respect to the preparation, filing,
prosecution and maintenance of the Progenics Patent Rights, Wyeth Collaboration Patent Rights, Wyeth Collaboration Joint
Patent Rights or Ono Collaboration Joint Patent Rights (including decisions relating to [*]), Salix shall make such decision.
(b) Ono Collaboration Patent Rights. Progenics shall provide to Salix, promptly following its receipt of the same
from Ono pursuant to Section 7.2.3 of the Ono Agreement, copies of all communications (and English translations or English
summaries thereof, as provided by Ono) sent to and received from patent offices pertaining to the prosecution of Ono
Collaboration Patent Rights. Salix shall have the right to review and comment upon the text of any such communication and
Progenics shall for that purpose solicit any comments that Salix may have and include them as part of its comments to Ono.
Salix shall have the right to have its patent counsel participate in any communications between Progenics’s patent counsel
and Ono’s patent counsel that may occur pursuant to, or in conformance with, Section 7.2.3 of the Ono Agreement.
Progenics shall provide Salix with notice of any communications between its patent counsel and Ono’s patent counsel that
may be contemplated pursuant to Section 7.2.3 of the Ono Agreement. Such notice shall be provided by Progenics promptly
following its becoming aware of any such proposed communication and in a manner appropriate to provide Salix with a
reasonable opportunity
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
52
to have its patent counsel participate in any such communication. Progenics shall provide Salix, promptly following its receipt
of the same from Ono pursuant to Section 7.2.3 of the Ono Agreement, with copies of advice it receives from Ono on the
maintenance of Ono Collaboration Patent Rights and shall include in its comments to Ono any comments that Salix may have
in respect of maintenance of Ono Collaboration Patent Rights. Progenics shall promptly notify Salix of any notice that it
should receive from Ono of Ono’s election not to prepare, file, prosecute or maintain any Ono Collaboration Patent Right, and
shall thereafter pursue the preparation, filing, prosecution and maintenance of any such Ono Collaboration Patent Rights at
Salix’s direction. Progenics acknowledges that Salix shall have the right to participate in any discussions that it may have
with Ono with respect to the preparation, filing, prosecution, and maintenance of Ono Collaboration Patent Rights
contemplated by Section 7.2.3 of the Ono Agreement and shall for such purpose notify Salix of any such discussions
promptly following its becoming aware of any such proposed discussions and in a manner appropriate to provide Salix with a
reasonable opportunity to participate therein. In no event shall Progenics consent to any action by or on behalf of Ono with
respect to the prosecution or maintenance of Ono Collaboration Patent Rights without first having obtained Salix’s consent
thereto. In the event that the Parties’ respective patent counsel, after good faith discussions, cannot agree with respect to
any decision to be made with respect to the preparation, filing, prosecution and maintenance of the Ono Collaboration Patent
Rights (including decisions relating to interference, opposition, revocation, reexamination and similar proceedings), then Salix
shall make such decision. In no event, however, shall Progenics be required to take any action that would cause Progenics to
breach any Progenics Third Party Agreement or that would, in Progenics’s judgment, be contrary to law. In the event that
pursuant to Section 2.12 Salix should succeed to all or substantially all of the rights and licenses currently held by Ono under
the Ono Agreement, then thereafter the Ono Collaboration Patent Rights shall be deemed to constitute Progenics Patent
Rights and, except as may be otherwise required by any ongoing provisions of the Ono Agreement, the prosecution and
maintenance thereof shall be governed by the provisions of Section 7.2(a).
(c) Joint Patent Rights. The Parties shall discuss in good faith, and thereupon implement, a mutually agreeable
patent strategy with respect to all Joint Technology that may be patentable, and shall cause their respective patent counsel
to communicate no less frequently than [*] per [*] regarding the prosecution and maintenance of the Joint Patent Rights in
the Territory and outside the Territory. With respect to all Joint Technology for which the Parties agree patent prosecution
should be sought, the Parties shall cooperate in the preparation, filing and prosecution of patent applications (including
provoking, instituting or defending interference, opposition, revocation, reexamination and similar proceedings related to the
Joint Patent Rights), and shall discuss and agree on the content and form of relevant patent applications and any other
relevant matters before such applications are made. Each Party shall consider in good faith any comments from the other
Party regarding steps to be taken to strengthen any Joint Patent Right. Salix shall serve as the lead Party to prosecute and
maintain all applications covering Joint Patent Rights in the
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
53
Territory (including provoking, instituting or defending interference, opposition, revocation, reexamination and similar
proceedings related to the Joint Patent Rights), at Salix’s expense, unless otherwise agreed by the Parties. In the event that
the Parties, after good faith discussions, cannot agree with respect to any decision to be made regarding the prosecution and
maintenance of the Joint Patent Rights in the Territory (including decisions relating to interference, opposition, revocation,
reexamination and similar proceedings related to the Joint Patent Rights), then Salix shall make such decision. In all cases,
each Party shall provide reasonable assistance to the other Party, at Salix’s expense, with respect to Joint Patent Rights in the
Territory.
(d) Salix Collaboration Technology. Salix shall be solely responsible for the prosecution of the Salix Collaboration
Patent Rights and the maintenance of any patents included within the Salix Collaboration Patent Rights at Salix’s expense.
Salix shall provide to Progenics copies of all communications sent to and received from patent offices pertaining to the
prosecution of the Salix Collaboration Patent Rights including, but not limited to, [*]. Furthermore, the Parties shall cause
their respective patent counsel to communicate no less frequently than once per Quarter regarding the prosecution of the
Salix Collaboration Patent Rights. In the event that the Parties, after good faith discussions, cannot agree with respect to any
decision to be made with respect to the preparation, filing, prosecution and maintenance of the Salix Collaboration Patent
Rights (including decisions relating to interference, opposition, revocation, reexamination and similar proceedings related to
the Salix Collaboration Patent Rights), Salix shall make such decision. In the event Salix elects not to prepare, file, prosecute
or maintain any Salix Collaboration Patent Rights, it shall give Progenics notice to this effect, sufficiently in advance to permit
Progenics to undertake such filing, prosecution and maintenance without a loss of rights, and, thereafter, Progenics may,
upon written notice to Salix, file and prosecute patent applications and maintain patents included in the Salix Collaboration
Patent Rights in Salix’s name, all at Progenics’s expense, provided that Progenics shall provide to Salix, for Salix’s review and
approval, copies of all communications sent to and received from any patent office pertaining to the Salix Collaboration
Patent Rights, including, but not limited to, draft patent applications, filing receipts, office actions, responses or amendments,
and notices of allowance.
(e) Orange Book Listings. At least [*] ([*]) Business Days prior to expiration of the time period under 21 C.F.R.
314.53 for submitting patent information pertaining to Progenics Patent Rights or Joint Patent Rights with respect to any
Product, Salix shall submit to Progenics any such draft submission, including any forms such as Form FDA 3542, Form FDA
3542a or any equivalent thereof, for Progenics’s review and comment. Salix shall consider in good faith any comments made
by Progenics pursuant to this Section 7.2(e). In the event that the Parties’ respective patent counsel, after good faith
discussions, cannot agree with respect to any decision to be made with respect to such draft submission, then Salix shall
make such decision.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
54
(f) Cooperation. Each Party agrees to cooperate with the other with respect to the preparation, filing, prosecution
and maintenance of patents and patent applications pursuant to this Section 7.2, including the execution of all such
documents and instruments and the performance of such acts (and causing its relevant employees to execute such
documents and instruments and to perform such acts) as may be reasonably necessary in order to permit the other Party to
continue any preparation, filing, prosecution or maintenance of Patent Rights as provided for in this Section 7.2.
(g) Application for Patent Term Extension . The Parties shall cooperate in obtaining Patent Term Extensions. At
least [*] ([*]) Business Days prior to the expiration of any statutory or other regulatory time period in the Territory for
submitting an application for patent term extension pertaining to any of the patent rights included in the Progenics Patent
Rights, Wyeth Collaboration Patent Rights, Wyeth Collaboration Joint Patent Rights, Ono Collaboration Patent Rights, Ono
Collaboration Joint Patent Rights, Ono Independent Patent Rights, Joint Patent Rights, Salix Collaboration Patent Rights or
Salix Independent Patent Rights, including applications for interim extension and SPC in the U.S. or in any foreign country in
the Territory, Salix shall submit to Progenics a draft application therefor for Progenics’s review and comment. Salix shall also
promptly provide to Progenics copies of all correspondence received from any patent office or regulatory office concerning
such application for extension, and Progenics shall have at least [*] ([*]) Business Days to review and comment on all
correspondence sent to any patent office or regulatory office pertaining to such application. Salix shall consider in good faith
any comments made by Progenics pursuant to this Section 7.2(g). In the event that the Parties cannot agree with respect to
any decision to be made under this Section 7.2(g), including the patent to apply for extension, then Salix shall make such
decision. As necessary to give effect to the provisions of this Section 7.2(g) and the allocation of rights and responsibilities
between Salix and Progenics set forth herein, Progenics shall exercise its rights under Section 7.2.5 of the Ono Agreement as
directed by Salix.
(h) Patent Markings. Salix and Progenics shall discuss whether Products shall be marked with the appropriate
numbers of patents owned solely or jointly by the Parties.
(i) Progenics Right to File, Prosecute and Maintain. Notwithstanding anything to the contrary in Section 7.2(a),
(b) and (c), in the event that Salix decides not to file, prosecute, maintain or otherwise decides to abandon any Progenics
Patent Rights, Wyeth Collaboration Patent Rights, Wyeth Collaboration Joint Patent Rights, Ono Collaboration Joint Patent
Rights, Ono Collaboration Patent Rights or the Joint Patent Rights, then Progenics, in its sole discretion and at its own
expense, shall have the right to file, prosecute and maintain such Patent Right. Whenever possible, Salix shall be given at
least [*] ([*]) Business Days prior to the earlier of the expiration of any shortened statutory period for response,
maintenance, or anticipated filing to review and comment upon the text of any such communication. In the event that the
LICENSE AGREEMENT
by and between
SALIX PHARMACEUTICALS, INC.
and
and
PROGENICS PHARMACEUTICALS, INC.
PROGENICS PHARMACEUTICALS NEVADA, INC.
and
EXCELSIOR LIFE SCIENCES IRELAND LIMITED
Dated as of 3 February 2011
TABLE OF CONTENTS
Page
1. DEFINITIONS 6
2. LICENSE GRANTS AND RELATED MATTERS 27
2.1. License from Progenics to Salix 27
2.2. Sublicenses 27
2.3. Direct Licenses to Affiliates 28
2.4. Certain Matters Relating to the University of Chicago 29
2.5. License from Salix to Progenics 29
2.6. Enforcement of Non-Assertion of Rights Covenants 29
2.7. Non-Assertion of Progenics’s Rights; Non-Exclusive License Grant; Non-Assertion by Salix 30
2.8. Fully Paid-Up, Royalty Free License 30
2.9. Know-How Disclosure and Transfer 30
2.10. Costs of Assistance 31
2.11. No Implied Rights 31
2.12. Japan 31
3. GOVERNANCE OF COLLABORATION 33
3.1. Joint Committees 33
3.2. Membership 34
3.3. Committee Meetings 35
3.4. Committee Officers; Minutes 35
3.5. Decision-Making 35
3.6. Sunset Provision 36
3.7. Oversight by Senior Executives 36
3.7. Oversight by Senior Executives 36
4. DEVELOPMENT 36
4.1. Development Plan 36
4.2. Development Responsibilities of Salix 37
4.3. Records 38
4.4. Reports on Development 38
4.5. Transfer of Data 39
4.6. Ongoing Development Work 39
5. COMMERCIALIZATION 41
5.1. Salix’s Commercialization Responsibilities and Efforts 41
5.2. Transition; Supply 42
5.3. Marketing Materials and Corporate Branding 43
5.4. Sharing of Information 43
5.5. Unauthorized Sales 43
1
6. PAYMENTS BY SALIX TO PROGENICS 44
6.1. Upfront License Fee Payment 44
6.2. Development Milestone Payments 45
6.3. Commercialization Milestone Payments 45
6.4. Ex-U.S. Sublicenses and Sales 46
6.5. Royalty Payments 46
6.6. Reports and Payments 48
6.7. Diagnostic or Veterinary Products 50
7. INTELLECTUAL PROPERTY 51
7.1. Ownership of Intellectual Property 51
7.2. Patent Prosecution 51
7.3. Enforcement of Patent Rights 56
7.4. Infringement and Third Party Licenses 60
7.5. Trademarks 61
8. CONFIDENTIALITY 62
8. CONFIDENTIALITY 62
8.1. Product Information 62
8.2. Confidentiality 63
8.3. Authorized Disclosure 64
8.4. SEC Filings and Other Disclosures 64
8.5. Public Announcements; Publications 65
9. REPRESENTATIONS AND WARRANTIES 66
9.1. Representations and Warranties of Each Expanded Party 66
9.2. Additional Representations and Warranties of Progenics 67
9.3. Survival 77
9.4. Progenics Party Covenants 77
10. TERM AND TERMINATION 79
10.1. Term 79
10.2. Termination for Cause 79
10.3. Termination for Insolvency or Bankruptcy 80
10.4. Termination by Salix at Its Discretion 80
10.5. Termination of Licenses; Accrued Obligations 80
10.6. Effects of Termination or Expiration 81
10.7. Sale of Inventory 83
10.8. Effect of Termination on Sublicenses Granted by Salix 83
10.9. Milestone Payments; Royalties 84
10.10. Surviving Provisions 84
10.11. Bankruptcy-Related Matters 84
11. INDEMNIFICATION AND INSURANCE 86
11.1. Indemnification by Salix 86
11.2. Indemnification by Progenics 86
2
11.3. Procedure 86
11.4. Insurance 87
12. REGULATORY MATTERS, PRODUCT SAFETY ISSUES, PRODUCT RECALLS 88
12.1. Regulatory
Matters 88
12.2. Rights of Cross-Reference 88
12.2. Rights of Cross-Reference 88
12.3. Communications with Regulatory Authorities 89
12.4. Regulatory Audits 90
12.5. Ownership of Regulatory Documentation, Registrational Filings and Regulatory Approvals; Transfer of
Registrational Filings and Regulatory Approvals 91
12.6.
Medical and Customer Inquiries 91
12.7.
Safety Agreement 91
12.8.
Product Recalls 92
13. MISCELLANEOUS 92
13.1. Force Majeure 92
13.2. Agency 93
13.3. Choice of Law 93
13.4. Notices 93
13.5. Severability 95
13.6. Entire Agreement 95
13.7. Modifications; No Waiver 95
13.8. Cumulative Remedies 95
13.9. Assignment; Binding Effect 96
13.10. Change in Control of Progenics; Acquisition 96
13.11. Counterparts 97
13.12. Executive Mediation 97
13.13. No Consequential Damages 98
13.14. Interpretation 98
13.15. Representation by Counsel 98
13.16. Further Assurances 98
13.17. Jurisdiction; Venue; Service 99
13.18. Specific Enforcement 99
13.19. Export Control 99
13.20. Performance by Third Party Contractors and Affiliates 100
13.21. No Benefit to Third Parties 100
13.22. Effect of Termination of the UR Labs-Progenics Agreement 100
13.23. Effect of Termination of the [*] Agreement 102
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
3
SCHEDULES
Schedule 1.32 Chemical drawing of Compound
Schedule 1.135 Salix COGs
Schedule 1.139 Salix Competitors
Schedule 4.1 Initial Development Outline
Schedule 4.6(d) Major supply and other contracts
Schedule 5.1(a) Initial Commercialization Outline
Schedule [*] [*]
Schedule [*] [*]
Schedule 9.2(a)(i) Licensed Patent Rights
Schedule 9.2(a)(ii) Progenics Third Party Agreements
Schedule 9.2(b)(i) Wyeth Collaboration Patent Rights
Schedule 9.2(b)(ii) Wyeth Collaboration Joint Patent Rights
Schedule 9.2(c)(i) Exceptions to ownership of Patent Rights
Schedule 9.2(c)(ii) Exceptions to ownership of interest in Joint Patent Rights
Schedule 9.2(d) Exceptions as to inventors
Schedule 9.2(e) Exceptions as to prior art
Schedule 9.2(f) Exceptions as to interest in Progenics Know-How
Schedule 9.2(i) Exceptions as to freedom to operate
Schedule 9.2(j)(i) Exceptions as to validity and enforceability of Progenics Patent Rights
Schedule 9.2(j)(ii) Exceptions as to misappropriation
Schedule 9.2(j)(iii) Exceptions as to claims of invalidity or unenforceability of Licensed Patent Rights
Schedule 9.2(m) Disclosures in respect of RELISTOR marks
Schedule 9.2(o) Adverse Information
Schedule 9.2(p) Studies
Schedule 9.2(r)(i) Regulatory Approvals
Schedule 9.2(s) Promotional Materials
RELATED AGREEMENTS
[*]
[*]
2010 Agreement Related to Progenics’s MNTX In-License, among the Expanded Parties and the University of Chicago and
2010 Agreement Related to Progenics’s MNTX In-License, among the Expanded Parties and the University of Chicago and
ARCH Development Corporation
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
4
This LICENSE AGREEMENT (this “ Agreement ”) is made and entered into as of 3 February 2011 (the “ Effective Date ”),
by and between Salix Pharmaceuticals, Inc., a corporation existing under the laws of California and having a place of business at
1700 Perimeter Park Drive, Morrisville, NC 27560 (“ Salix ”), and Progenics Pharmaceuticals, Inc., a corporation organized and
existing under the laws of the State of Delaware and having a principal place of business at 777 Old Saw Mill River Road,
Tarrytown, NY 10591 (“ Progenics ”), Progenics Pharmaceuticals Nevada, Inc., a corporation organized and existing under the
laws of the State of Nevada and having a principal place of business at 777 Old Saw Mill River Road, Tarrytown, NY 10591, USA
and a wholly-owned subsidiary of Progenics (“ ProNev ”), and Excelsior Life Sciences Ireland Limited, a corporation organized
and existing under the laws of Ireland and having a principal place of business at 25/28 North Wall Quay, Dublin 1 Ireland and a
wholly-owned subsidiary of Progenics (“ Excelsior ,” and together with Progenics and ProNev, the “ Progenics Parties ”). Salix
and Progenics may each be referred to herein individually as a “ Party ” and, collectively, as the “ Parties .” Salix and the
Progenics Parties may each be referred to herein individually as an “ Expanded Party ” and, collectively, as the “ Expanded
Parties .”
BACKGROUND
A. Salix is in the business of discovering, developing, manufacturing and marketing human pharmaceutical products.
B. Progenics is a biopharmaceutical company focusing on the development and commercialization of innovative
therapeutic products. Progenics has developed [*]-methylnaltrexone (“[ * ] -MNTX ”) for the treatment of opioid-induced
constipation associated with advanced illness and is developing [*]-MNTX for other indications and in other formulations.
C. The Progenics Parties own or have rights under certain patents, patent applications, other valuable technology and
know-how relating to [*]-MNTX and other methylnaltrexone molecules.
D. Progenics and ProNev entered into a License and Co-Development Agreement with Wyeth, acting through Wyeth
Pharmaceuticals Division, Wyeth Whitehall Pharmaceuticals, Inc. and Wyeth Ayerst Lederle, Inc. (collectively, “ Wyeth ”),
dated as of 23 December 2005 (the “ Wyeth Agreement ”), under which Progenics granted Wyeth a worldwide license to develop
and commercialize [*]-MNTX.
E. The parties to the Wyeth Agreement entered into a Partial Termination and License Agreement, dated 16 October 2008
(the “ Partial Termination Agreement ”), confirming the termination with respect to Japan of the rights granted to Wyeth under
(the “ Partial Termination Agreement ”), confirming the termination with respect to Japan of the rights granted to Wyeth under
the Wyeth Agreement.
F. Progenics entered into a License Agreement with Ono Pharmaceutical Co., Ltd. (“ Ono ”), dated as of 16 October 2008
(the “ Ono Agreement ”), under which Progenics granted Ono a license to develop and commercialize the subcutaneous
formulation of [*]-MNTX for the Japanese market and an option to develop and commercialize additional formulations of [*]-
MNTX.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
5
G. Wyeth and certain of its affiliates and Progenics, ProNev and their affiliate Excelsior entered into a Termination and
Transition Agreement, effective 1 October 2009, as amended (the “ Termination Agreement ”), providing for the termination of
the Wyeth Agreement and the Partial Termination Agreement.
H. Salix and Progenics wish to collaborate regarding the further development and commercialization of methylnaltrexone
worldwide except, unless and until Japan is included in the Territory hereunder, for Japan, and Progenics wishes to grant to
Salix, and Salix wishes to receive from Progenics, a license to so develop and commercialize methylnaltrexone.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth below and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the Expanded Parties hereby agree as follows:
1. DEFINITIONS
Capitalized terms used in this Agreement, including its Exhibits and/or Schedules, and not otherwise defined herein shall
have the following meanings:
1.1. “ 1985 Agreement ” means the Option and License Agreement entered into by UR Labs and the University of Chicago
and dated as of 8 May 1985, as amended.
1.2. “[ *] ” has the meaning set forth in Section [*].
1.3. “ [ * ]” has the meaning set forth in Section [*].
1.4. “ [ *] ” has the meaning set forth in Section [*].
1.5. “[ * ]” means, in respect of the [*] or the [*], that:
1.5. “[ * ]” means, in respect of the [*] or the [*], that:
(a) the [*] required for [*] does not contain any [*]; and, in addition,
(b) [*] is required by the [*].
1.6. “ Acquisition ,” with respect to a Party, means a merger, acquisition (whether of all of the stock or all or substantially
all of the assets of a Person or any operating or business division of a Person) or similar transaction by or with the Party, other
than a Change in Control of the Party.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
6
1.7. “ Action Party ” has the meaning set forth in Section 7.3(d).
1.8. “ Adverse Events ” has the meaning set forth in Section 9.2(o).
1.9. “ Affiliate ” means, in respect of any Person, any other Person that, directly controls or is controlled by, or is under
common control with the first Person. For purposes of this definition , “control” and, with correlative meanings, the terms
“controlled by” and “under common control with” means (a) the possession, directly or indirectly, of the power to direct, or
cause the direction of, the management or policies, whether through the ownership of voting securities, by contract relating to
voting rights or corporate governance, or otherwise, or (b) ownership, directly or indirectly, of fifty percent (50%) or more of the
shares of stock entitled to vote for the election of directors, in the case of a corporation, or fifty percent (50%) or more of the
voting securities, or other voting ownership interests, in the case of any limited liability company or other type of legal entity.
1.10. “ Agreement ” has the meaning set forth in the first paragraph hereof.
1.11. “ API ” means active pharmaceutical ingredient.
1.12. “ Applicable Law ” means applicable national, federal, state, provincial, local or other laws, statutes, rules,
regulations and guidances, including rules, regulations, guidances, guidelines or other requirements of Regulatory Authorities
or other governmental authorities, as in effect from time to time in any jurisdiction.
1.13. “ Applicable Net Sales Percentage ” has the meaning set forth in Section 6.5(a).
1.14. “Board of Directors ” has the meaning set forth in the definition of “Change in Control.”
1.15. “ Business Day ” means a day other than a Saturday or a Sunday on which banks in New York, New York are open
for the conduct of regular banking business.
1.16. “ Calendar Year ” means each successive period of twelve (12) months commencing on January 1 and ending on
December 31.
1.17. “ cGCP ” means current good clinical practices as stated in Applicable Law, including Directive 2001/20/EC, Directive
2005/28/EC, and 21 C.F.R. Parts 50, 56 and 312 et seq., each as amended from time to time and all FDA and ICH guidelines related
thereto, including the ICH Consolidated Guidelines on Good Clinical Practices.
1.18. “ cGLP ” means current good laboratory practices as stated in Applicable Law, including Directive 2004/10/EC and 21
C.F.R. Part 58 et seq., each as amended from time to time and all FDA and Council of the Organization for Economic Cooperation
and Development (OECD) guidelines related thereto.
1.19. “ cGMP ” means current good manufacturing practices as stated in Applicable Law, including 21 C.F.R. Part 210 and
211 and Directive 2003/94/EEC, each as amended from time to time and all FDA, European Commission and ICH guidelines
related thereto.
7
1.20. “ Change in Control ”, with respect to a Party, shall be deemed to have occurred if any of the following occurs after
the Effective Date:
(i) any “person” or “group” (as such terms are defined below) (a) is or becomes the “beneficial owner” (as
defined below), directly or indirectly, of shares of capital stock or other interests (including partnership interests) of such Party
then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of the
directors, managers or similar supervisory positions (“ Voting Stock ”) of such Party representing fifty percent (50%) or more of
the total voting power of all outstanding classes of Voting Stock of such Party or (b) has the power, directly or indirectly, to
elect a majority of the members of the Party’s board of directors or similar governing body (“ Board of Directors ”); or
(ii) such Party enters into a merger, consolidation or similar transaction with another Person (whether or not
such Party is the surviving entity) and as a result of such merger, consolidation or similar transaction (a) the members of the
Board of Directors of such Party immediately prior to such transaction constitute less than a majority of the members of the
Board of Directors of such Party or such surviving Person immediately following such transaction or (b) the Persons that
beneficially owned, directly or indirectly, the shares of Voting Stock of such Party immediately prior to such transaction cease
to beneficially own, directly or indirectly, shares of Voting Stock of such Party representing at least a majority of the total voting
power of all outstanding classes of Voting Stock of the surviving Person in substantially the same proportions as their
ownership of Voting Stock of such Party immediately prior to such transaction; or
(iii) such Party sells or transfers to any Third Party, in one or more related transactions, properties or assets
representing all or substantially all of such Party’s consolidated total assets; or
(iv) the holders of capital stock of such Party approve a plan or proposal for the liquidation or dissolution of
such Party.
such Party.
For the purpose of this definition of Change in Control, (a) “person” and “group” have the meanings given such terms under
Section 13(d) and 14(d) of the United States Securities Exchange Act of 1934 and the term “group” includes any group acting
for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the said Act, (b) a
“beneficial owner” shall be determined in accordance with Rule 13d-3 under the aforesaid Act, and (c) the terms “beneficially
owned” and “beneficially own” shall have meanings correlative to that of “beneficial owner.”
1.21. “Chronic Pain Product” means a Product for use in the Human Field for the treatment of opioid-induced
constipation arising from the treatment of chronic pain associated with one or more non-cancer diseases or conditions.
8
1.22. “ [ * ]” has the meaning set forth in Section [*].
1.23. “ Claim ” means any claim, action, cause of action, chose in action, or suit (in contract or tort or otherwise), litigation,
arbitration, investigation, opposition, hearing, complaint, demand, notice or proceeding to, from, by or before any arbitrator,
court, administrative organization, or other governmental authority or other Person.
1.24. “Clinical Data” means all information relating to a drug product made, collected or otherwise generated in the
performance of or in connection with any clinical trials (including any Phase 4 Clinical Trials), including any data, reports and
results relating thereto.
1.25. “ CMC” means Chemistry, Manufacturing and Controls information as required to be submitted under Section 505 of
the FD&C Act and 21 C.F.R. 214.
1.26. “ Collaboration ” means the Development, Commercialization and other activities of Salix and Progenics under this
Agreement in respect of Products in the Field in or for the Territory.
1.27. “ Commercialization ” means, in respect of a particular compound or product and a particular country, all activities
related to the commercial exploitation of the compound or product in the country, including the making, having made, supply,
use, importation, exportation, marketing, promotion, distribution, pre-launch, launch, offering for sale or sale of the compound or
product in the country. When used as a verb, “Commercialize” or “Commercializing” means to engage in Commercialization.
1.28. “ Commercialization Milestone Payments ” has the meaning set forth in Section 6.3.
1.29. “ Commercialization Plan ” means a comprehensive plan prepared by Salix (as amended from time to time in
accordance with this Agreement) that specifies the efforts Salix, its Affiliates and Sublicensees intend to use in respect of
Commercialization of Products in the Field in the Territory, which plan shall be consistent with the Initial Commercialization
Outline and with Salix’s obligations under Section 5.1 and shall include (with reasonable detail) a description of, and [*] and [*]
Outline and with Salix’s obligations under Section 5.1 and shall include (with reasonable detail) a description of, and [*] and [*]
for, all Product-related [*] activities (including activities [*] and other arrangements affecting the Commercialization of
Products), including [*] activities, the [*] in each Major Market Country, Product-related [*] in each Major Market Country,
Product-related [*] activities to be performed by [*] in furtherance of Commercialization of Products in the Field in the Territory,
and the general [*] in each Major Market Country.
1.30. “ Commercially Reasonable Efforts ” means efforts and resources normally used by the Party required to use such
efforts and resources for a product, proposed product or technology owned by it or to which it has rights, which is of similar
commercial potential at a similar stage in its development or product life to the product in question, (a) taking into account
issues of: [*].
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
9
1.31. “ Committee ” and “ Committees ” have the meaning set forth in Section 3.1.
1.32. “ Compound ” means methylnaltrexone (MNTX), which is chemically defined as [*]. A chemical drawing of the
Compound is attached as Schedule 1.32 .
1.33. “ Confidential Information ” means all information disclosed by one Expanded Party to another Expanded Party
(other than solely by virtue of such information being disclosed between the Progenics Parties), whether prior to the Effective
Date or during the Term, that either is identified as confidential or is information that is of a nature that is customarily regarded
as confidential within the pharmaceutical industry, whether disclosed in electronic, tangible, oral or visual form. The terms and
existence of this Agreement shall constitute Confidential Information of each Expanded Party, the restrictions on disclosure of
which imposed hereunder shall be subject to Section 8.4.
1.34. “ Control ” means, with respect to any item of Know-How, Regulatory Documentation, Patent Rights, or trademark or
other intellectual property right, possession of the right, whether directly or indirectly, whether existing as of the Effective Date
or thereafter acquired, and whether by ownership, license or otherwise (other than by operation of any license and other grants
hereunder), to assign or grant a license, sublicense or other right to or under such Know-How, Regulatory Documentation,
Patent Rights, or trademark or other intellectual property right as provided for herein without violating the terms of any
agreement or other arrangement with any Third Party.
1.35. “ Controlling Affiliate ” of a Person means an Affiliate that controls (as such term is used in the definition of
Affiliate) such Person.
1.36. “ Controlling Third Party ” has the meaning set forth in the definition of Progenics Know-How.
1.37. “ CRO ” has the meaning set forth in Section 9.2(n)(iii).
1.38. “Cure Period ” has the meaning set forth in Section 10.2(a).
1.39. “ Debtor Party ” has the meaning set forth in the Section 10.11.
1.40. “ Designated Countries ” means (a) the Major Market Countries, (b) any country in the Territory in which [*] or [*]
have, [*], [*] and [*], and (c) all other countries in the Territory except [*] and [*].
1.41. “ Development ” means, in respect of a particular compound or pharmaceutical product and a particular country, all
activities related to the development of the compound or
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
10
product and obtaining Regulatory Approval for the compound or product in the country, including all activities related to
research, development, preclinical testing, stability testing, toxicology, formulation, product line-extensions, clinical trials,
regulatory affairs, statistical analysis, report writing, manufacturing process and scale up, qualification and validation activities,
product life-cycle management, quality assurance/quality control development and regulatory filing creation and submission
related to obtaining Regulatory Approval for the compound or product in the country. When used as a verb, “Develop” or
“Developing” means to engage in Development.
1.42. “ Development Milestone Payments ” has the meaning set forth in Section 6.2.
1.43. “ Development Plan ” has the meaning set forth in Section 4.1.
1.44. “ Disclosing Party ” has the meaning set forth in Section 8.2.
1.45. “ Dispute ” has the meaning set forth in Section 13.12(a).
1.46. “ Drug Price Approval ” means, with respect to any drug product in any country, the achievement of all applicable
pricing and reimbursement approvals with respect to such drug product in such country.
1.47. “ Effective Date ” has the meaning set forth in the first paragraph hereof.
1.48. “ EMEA ” means the European Medicines Association, and any successor agency thereto.
1.49. “ Excelsior ” has the meaning set forth in the first paragraph hereof.
1.50. “ Executive Mediation ” has the meaning set forth in Section 13.12(a).
1.51. “ Expanded Party ” has the meaning set forth in the first paragraph hereof.
1.51. “ Expanded Party ” has the meaning set forth in the first paragraph hereof.
1.52. “ FD&C Act ” means the United States Federal Food, Drug, and Cosmetic Act, as amended, and the rules and
regulations promulgated thereunder.
1.53. “ FDA ” means the United States Food and Drug Administration or any successor agency thereto.
1.54. “ Field” means the Human Field and the Non-Human Animal Field, together.
1.55. “ First Commercial Sale ” means, with respect to a particular Product and a particular country in the Territory, the
first commercial sale of such Product to a Third Party in such country after such Product has been granted Regulatory
Marketing Approval by a Regulatory Authority in the Territory. By way of example and for the avoidance of doubt, the
11
First Commercial Sale of a [*] shall be the first commercial sale of such Product to a Third Party in such country after such [*]
has been granted Regulatory Marketing Approval by a Regulatory Authority in the Territory for an [*].
1.56. “ FTE Rate ” means the hourly rate of [*] dollars ($[*]) per hour for certain activities that Salix requests Progenics to
perform under the Collaboration. This hourly rate shall apply to Progenics activities through [*], and will be adjusted at the
beginning of each subsequent Calendar Year from the prior year amount by the change in the United States Department of
Labor Bureau of Labor Statistics Consumer Price Index- All Urban Consumers during the prior year.
1.57. “ GAAP ” means U.S. generally accepted accounting principles consistently applied.
1.58. “[ * ] Patent Rights ” means those Patent Rights licensed by [*] [*] to Progenics pursuant to a Third Party
Agreement between [*] and Progenics dated [*], as and to the extent such Patent Rights subsist and claim inventions made on
or prior to the Effective Date and as and to the extent Controlled by Progenics, Progenics’s Affiliates, Salix or Salix’s Affiliates
as of the Effective Date or at any time during the Term.
1.59. “ Human Field ” means all uses in humans, including the diagnosis, treatment or prevention of diseases or
conditions in humans.
1.60. “ Indemnified Party ” has the meaning set forth in Section 11.3.
1.61. “ Indemnifying Party ” has the meaning set forth in Section 11.3.
1.62. “ IND ” means an investigational new drug application, clinical study application, clinical trial exemption, or similar
application or submission for approval to conduct human clinical investigations filed with or submitted to a Regulatory
Authority in conformity with the requirements of such Regulatory Authority.
1.63. “Initial Commercialization Outline ” has the meaning set forth in Section 5.1.
1.64. “ Initial Development Outline ” has the meaning set forth in Section 4.1.
1.65. “ Invoiced Sales ” has the meaning set forth in the definition of Net Sales.
1.66. “ Japan ” means the country of Japan (Nihon/Nippon Koku).
1.67. “ JDC ” has the meaning set forth in Section 3.1(a).
1.68. “ Joint Know-How ” means any Know-How made or created in the course of the Collaboration jointly by employees
or agents of Progenics or any of its Affiliates or licensees (to
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
12
the extent such Know-How involving such a licensee is Controlled by Progenics) and employees or agents of Salix or any of its
Affiliates or Sublicensees (to the extent such Know-How involving such a Sublicensee is Controlled by Salix), as determined in
accordance with Section 7.1(a).
1.69. “ Joint Patent Rights ” means any Patent Rights related to any invention, development or discovery made or created
in the course of the Collaboration jointly by employees or agents of Progenics or any of its Affiliates or licensees (to the extent
such Patent Rights involving such a licensee is Controlled by Progenics) and employees or agents of Salix or any of its
Affiliates or Sublicensees (to the extent such Patent Rights involving such a Sublicensee is Controlled by Salix), as determined
in accordance with Section 7.1(a).
1.70. “ Joint Technology ” means the Joint Know-How and the Joint Patent Rights.
1.71. “ JSC ” has the meaning set forth in Section 3.1(a).
1.72. “ Know-How ” means any confidential unpatented or unpatentable invention, development, discovery, technology,
cell line, biological material, compound, probe, sequence, technical information, method, biological material, Clinical Data, or
other confidential information or material.
1.73. “ Liability ” has the meaning set forth in Section 11.1.
1.74. “ License Notice ” has the meaning set forth in Section 2.13(a).
1.75. “ Licensed Activit(y/ies) ” means, collectively, the Development and Commercialization of any Product in the Field in
or for the Territory, the practice of any Progenics Technology or Joint Technology pursuant to the licenses granted by
Progenics to Salix hereunder or by Salix to its Affiliates or Sublicensees pursuant hereto, or the exercise of any other right
granted by Progenics to Salix under this Agreement or by Salix to its Affiliates or Sublicensees pursuant hereto, in each case to
granted by Progenics to Salix under this Agreement or by Salix to its Affiliates or Sublicensees pursuant hereto, in each case to
the extent permitted under this Agreement.
1.76. “ Licensed Know-How ” means (a) the Progenics Know-How and (b) Progenics’s interest in the Wyeth Collaboration
Joint Know-How, the Wyeth Collaboration Know-How, the Ono Collaboration Joint Know-How, the Ono Collaboration Know-
How, and Know-How included in the Wyeth Additional Licensed Rights.
1.77. “ Licensed Patent Rights ” means (a) the Progenics Patent Rights and (b) Progenics’s interest in the Wyeth
Collaboration Joint Patent Rights, the Wyeth Collaboration Patent Rights, the Ono Collaboration Joint Patent Rights, the Ono
Collaboration Patent Rights, Patent Rights included in the Wyeth Additional Licensed Rights, and the Ono Additional Patent
Rights.
1.78. “ Licensed Technology ” means the Licensed Know-How and the Licensed Patent Rights.
13
1.79. “ Major Market Country ” means any of [*] and [*]. In the event that, and commencing at such time as, the [*] set
forth in this Agreement are [*], then [*] shall also be a “Major Market Country” for purposes of this definition.
1.80. “ Manufacture ” or “ Manufacturing ” means, in respect of a particular compound or pharmaceutical product, those
manufacturing-related activities that support Development and Commercialization activities for such compound or product,
including the synthesis, formulating, processing, scale-up, validation, qualification and audit of manufacturing facilities, bulk
production, packaging, Product Labeling, fill/finish work, storage and release of such compound or product and related quality
assurance/quality control and technical support activities.
1.81. “[ * ] Agreement ” means the Exclusive License Agreement, dated [*] [*], between [*], [*] and Progenics.
1.82. “ [ * ] Patent Rights” means those Patent Rights licensed to Progenics under the [*], as and to the extent such
Patent Rights subsist and claim inventions made on or prior to the Effective Date and as and to the extent Controlled by
Progenics, Progenics’s Affiliates, Salix or Salix’s Affiliates as of the Effective Date or at any time during the Term.
1.83. “ NDA ” means a New Drug Application that is filed with the FDA to formally propose that the FDA approve a new
drug for sale and marketing in the United States, or an equivalent application or submission.
1.84. “ Net Sales ” means, for any period, the gross amount invoiced by Salix and its Affiliates for sales of Products to
Third Parties (other than Sublicensees) (the “ Invoiced Sales ”), less deductions for
(a) normal and customary trade, quantity and cash discounts and sales returns and allowances, including (i) those
granted on account of price adjustments, billing errors, rejected goods, damaged goods and returns, (ii) reimbursements,
rebates, chargebacks, incentives and similar payments to wholesalers and other distributors, buying groups, pharmacy
benefit management organizations and health care insurance carriers, and (iii) coupons, co-pay cards and similar price
reductions and discounts provided to customers;
(b) freight, postage, shipping and insurance expenses to the extent that such items are included in the Invoiced
Sales;
(c) customs and excise duties and other duties related to the sales to the extent that such items are included in the
Invoiced Sales;
(d) rebates and similar payments made with respect to sales paid for by any governmental or regulatory authority
such as, by way of illustration and not in limitation of the Parties’ rights hereunder, Federal or state Medicaid, Medicare or
similar state program or equivalent foreign governmental program;
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
14
(e) sales and other taxes and duties actually paid by Salix and its Affiliates and Sublicensees and directly related to
the sale or delivery of the relevant Product (but not including taxes assessed against the income derived from such sale);
(f) in respect of sales outside the United States, deductions in the applicable jurisdiction that are substantially
similar to deductions otherwise set forth in clauses (a) through (e), above, but because of local Applicable Law, practices and
customs may not conform in terminology to the deductions set forth in the said clauses (a) through (e);
(g) product placement and similar fees paid to pharmacies only in connection with the initial launch of a Product
and within [*] ([*]) [*] of the commencement of such launch; and
(h) any such invoiced amounts that are not collected by Salix or its Affiliates, provided that, to the extent that any
uncollected invoiced amount relates to a group of products, the deduction taken for such uncollected amount shall only take
into account the share of such uncollected amount fairly allocable to Products;
in each case, as accounted for in accordance with United States generally accepted accounting principles, consistently applied.
Any of the deductions listed above that involves a payment by Salix or its Affiliates shall be taken as a deduction in the Quarter
in which the payment is accrued by such entity, and if such accrual is reversed a corresponding credit will be made to Net Sales
in the Quarter in which the reversal is made. Deductions pursuant to subsection (h) above shall be taken in the Quarter in which
such sales are no longer recorded as a receivable. For purposes of determining Net Sales, a Product shall be deemed to be sold
when invoiced and a “sale” shall not include transfers or dispositions for charitable, promotional, pre-clinical, clinical,
regulatory or governmental purposes to the extent no amount is received by Salix or its Affiliates in connection therewith.
Without derogation to the foregoing, a “sale” shall include a transfer or other disposition for consideration other than cash, in
which case such consideration shall be valued at the fair market value thereof.
For purposes of calculating Net Sales, sales between or among Salix and its Affiliates and Sublicensees shall be excluded
from the computation of Net Sales, but sales by Salix and its Affiliates to Third Parties other than Sublicensees shall be included
in the computation of Net Sales. For the avoidance of doubt, the preceding sentence shall not apply for purposes of the
determination of Sublicense Revenue.
If Salix or its Affiliates should, in a given country during a given accounting period, sell a Product that contains one or
more active ingredients in addition to the Compound (which may be
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
15
either combined in a single formulation or bundled with separate formulations but sold as one product), Net Sales for such
combination product shall be calculated by [*]. If, on a country-by-country basis, either the relevant Product, on the one hand,
or such other active ingredient or ingredients in the combination product, on the other hand, is, or both of the foregoing are, not
sold separately in said country, Net Sales for the purpose of determining royalties of the relevant Product shall be determined
by the respective chief financial officers of the Parties in good faith and in a manner consistent with the intent of this
Agreement, provided that any matters in dispute with respect thereto shall be reasonably determined by the chief financial
officer of [*] in a manner consistent with the intent of this Agreement unless an Expanded Party invokes the procedures set
forth in Section 13.12 hereof with respect to such matter.
During the Term, Salix shall not “bundle” a Product for sale together with one or more other products or offer a Product for
sale as a “loss leader” to encourage the sale of one or more other product(s) without first reaching an agreement with Progenics,
to be negotiated between Progenics and Salix in good faith, in respect of the appropriate allocation, in accordance with
Applicable Law, of the gross amount invoiced for such group or bundle of products between the Product and other products in
the bundle or group.
No sales of Products that give rise to, or are made pursuant to arrangements involving, Sublicense Revenue that is shared
between Salix and Progenics pursuant to Section 6.4(a) shall constitute or be included in Net Sales.
1.85. “ New Progenics OIC Product ” has the meaning set forth in Section 2.13(a).
1.86. “ Non-Debtor Party ” has the meaning set forth in Section 10.11.
1.87. “ Non-Human Animal Field ” means all uses in non-human animals, including the diagnosis, treatment or prevention
of diseases or conditions in non-human animals.
1.88. “ Notice of Breach ” has the meaning set forth in Section 10.2(a).
1.89. “ Ono ” has the meaning set forth in the Background.
1.90. “ Ono Additional Patent Right s” means those Patent Rights under which Ono grants a license to Progenics
pursuant to Section 2.6.2 of the Ono Agreement.
1.91. “ Ono Agreement ” has the meaning set forth in the Background.
1.92. “ Ono Collaboration Joint Know-How ” means the “Joint Know-How” as such term is defined in the Ono
1.92. “ Ono Collaboration Joint Know-How ” means the “Joint Know-How” as such term is defined in the Ono
Agreement, as and to the extent Controlled by Progenics or its Affiliates as of the Effective Date or at any time during the Term,
which relates to the Compound or a Product or to the use of the Compound or a Product.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
16
1.93. “ Ono Collaboration Joint Patent Rights ” means the “Joint Patent Rights” as such term is defined in the Ono
Agreement, as and to the extent such rights subsist and as and to the extent Controlled by Progenics or its Affiliates as of the
Effective Date or at any time during the Term, which relate to the Compound or a Product or to the use of the Compound or a
Product.
1.94. “ Ono Collaboration Know-How ” means the “Ono Collaboration Know-How” as such term is defined in the Ono
Agreement, as and to the extent Controlled by Progenics or its Affiliates as of the Effective Date or at any time during the Term,
which relates to the Compound or a Product or to the use of the Compound or a Product.
1.95. “ Ono Collaboration Patent Rights ” means the “Ono Collaboration Patent Rights” as such term is defined in the
Ono Agreement, as and to the extent such rights subsist and as and to the extent Controlled by Progenics or its Affiliates as of
the Effective Date or at any time during the Term, which relate to the Compound or a Product or to the use of the Compound or
a Product.
1.96. “Ono Independent Patent Rights” means the “Ono Independent Patent Rights” as such term is defined in the Ono
Agreement.
1.97. “ Oral Product ” means any Product that is formulated to be administered orally for use in the Human Field.
1.98. “[ * ]” has the meaning set forth in Section [*].
1.99. “Other Product ” has the meaning set forth in Section 1.168.
1.100. “ Outside Contractor ” means any Person contracted by Salix or Progenics or an Affiliate or Sublicensee thereof to
provide products or services relating to the Collaboration, including contract manufacturing services, clinical services or
regulatory services that contribute to the performance of its responsibilities under the Development Plan or that result in any
work product or other information that Progenics or Salix or such Affiliate or Sublicensee could include or might reasonably be
expected to include in any document or report, including, a Registrational Filing, submitted to a Regulatory Authority or subject
to review by a Regulatory Authority.
1.101. “ Partial Termination Agreement ” has the meaning set forth in the Background.
1.101. “ Partial Termination Agreement ” has the meaning set forth in the Background.
1.102. “ Party ” and “ Parties ” have the meaning set forth in the first paragraph hereof.
1.103. “ Patent Rights ” means (a) all national, regional and international patent applications, including divisionals,
continuations, continuations-in-part, provisionals, converted provisionals, and continued prosecution applications, and all
international equivalents thereof, (b) all national, regional and international patents, including utility models, petty patents and
design patents and certificates of invention, (c) any and all extensions or restorations of patents
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
17
by existing or future extension or restoration mechanisms, including revalidations, reissues, re-examinations and extensions
(including any supplementary protection certificates and the like) and (d) any similar rights, including so-called pipeline
protection, or any importation, revalidation, confirmation or introduction patent or registration patent or patent of additions.
1.104. “ Patent Term Extension ” shall mean any extension of Patent Rights that may be granted by any patent office or
regulatory office, including supplemental protection certificates (“ SPCs ”).
1.105. “ Person ” means any individual or legal entity.
1.106. “ Phase 4 Clinical Trial ” means, in respect of a pharmaceutical product, product support clinical trials of the
product not for the purpose of obtaining Regulatory Marketing Approval of the product, whether such clinical trials are
commenced before or after receipt of Regulatory Marketing Approval of the product.
1.107. “ Product ” means a pharmaceutical product containing the Compound, whether alone or in combination with other
APIs or other substances and whether formulated to be administered subcutaneously, intravenously, orally or otherwise. A
Product shall be considered separate from another Product if, in order to obtain Regulatory Marketing Approval for such
second Product, the applicant is required to submit Clinical Data not submitted or required to be submitted in order to obtain
Regulatory Marketing Approval for the first Product.
1.108. “ Product Information ” has the meaning set forth in Section 8.1(a).
1.109. “ Product Labeling ” means, with respect to a particular pharmaceutical product and a particular country, (a) the full
prescribing information for the product approved by the applicable Regulatory Authorities in such country, including any
required patient information; and (b) all labels and other written, printed or graphic matter physically upon a container, wrapper
or any package insert utilized with or for the product in such country.
1.110. “ Product Trademarks ” means the Trademarks, including all product packaging and other trade dress, and all
copyrights relating thereto and therein, used, held for use or intended for use on or in connection with the Development and
copyrights relating thereto and therein, used, held for use or intended for use on or in connection with the Development and
Commercialization of Products.
1.111. “ Progenics ” has the meaning set forth in the first paragraph hereof.
1.112. “ Progenics Indemnified Party ” has the meaning set forth in Section 11.1.
1.113. “ Progenics Know-How ” means Know-How as and to the extent Controlled by Progenics or its Affiliates as of the
Effective Date or at any time during the Term which relates to the Compound or a Product or to the Manufacture, use, sale,
Development or Commercialization of the Compound or a Product. For the purposes hereof, Progenics Know-How does not
include Wyeth Collaboration Know-How, Wyeth Collaboration Joint Know-How, Ono Collaboration Know-How, Ono
Collaboration Joint Know-How, Salix Collaboration Know-How, Progenics’s interest in Joint Know-How, or Know-How
Controlled by a Third Party that becomes an Affiliate of Progenics pursuant to a transaction or series of related transactions as
a result of which such Third Party is able to elect a majority of the members of the board of
18
directors of Progenics (or its successor company) or any of its Controlling Affiliates (a “ Controlling Third Party ”) to the
extent such Controlling Third Party’s Know-How was Controlled by such Controlling Third Party (and not by Progenics) prior
to the completion of such transaction or series of related transactions.
1.114. “Progenics Party ” and “ Progenics Parties ” have the meaning set forth in the first paragraph hereof.
1.115. “ Progenics Patent Rights ” means any Patent Right as and to the extent subsisting and as and to the extent
Controlled by Progenics or its Affiliates as of the Effective Date or at any time during the Term having issued claims that, or
pending claims that if issued, would be infringed by an unlicensed Third Party’s Manufacture, use, sale, importation,
Development or Commercialization of the Compound or any Product. For the purposes hereof, the Progenics Patent Rights
include the [*] Patent Rights, the [*] Patent Rights and the [*] Patent Rights, and shall continue to include such Patent Rights
even if the underlying Third Party Agreement by which Progenics obtains any such Patent Rights is assigned to Salix or to a
Salix Affiliate. For the avoidance of doubt, the calculation of the Royalty Period shall not be affected by such an assignment of
any such Third Party Agreement. For the purposes hereof, “Progenics Patent Rights” does not include Wyeth Collaboration
Patent Rights, Wyeth Collaboration Joint Patent Rights, Ono Collaboration Patent Rights, Ono Collaboration Joint Patent
Rights, Progenics’s interest in Joint Patent Rights or Patent Rights Controlled by a Controlling Third Party to the extent such
Controlling Third Party’s Patent Rights were Controlled by such Controlling Third Party (and not by Progenics) prior to the
completion of the transaction or series of related transactions through which a Third Party became such Controlling Third Party.
Progenics Patent Rights in the Territory as of the Effective Date are identified on Schedule 9.2(a)(i) .
1.116. “ Progenics Technology ” means the Progenics Know-How and the Progenics Patent Rights.
1.117. “ Progenics Third Party Agreement ” means any agreement in effect as of the Effective Date (a) under which any
Progenics Party or any of its Affiliates is granted any license or otherwise has any rights or interests under or in respect of any
Progenics Party or any of its Affiliates is granted any license or otherwise has any rights or interests under or in respect of any
Licensed Technology or (b) that relates to the Manufacture, Development, or Commercialization of the Compound or any
Product in the Territory, including the agreements listed in Schedule 9.2(a)(ii) .
1.118. “ Promotional Materials ” means, with respect to a particular pharmaceutical product, all [*] materials with respect
to the product and all [*] or [*] matter, including [*] and [*] and [*] and [*] (for example, [*] and other such items) intended for
use or used in connection with any promotion of the product, except Product Labeling.
1.119. “ ProNev ” has the meaning set forth in the first paragraph hereof.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
19
1.120. “ Quarter ” means the respective periods of three (3) consecutive calendar months ending on
March 31, June 30, September 30 or December 31, for so long as this Agreement is in effect.
1.121. “ Quarterly Activity Report ” has the meaning set forth in Section 6.6(b).
1.122. [*].
1.123. “ Recall ” means, with respect to any pharmaceutical product, a “recall” or a “product withdrawal” or a “stock
recovery” or any similar term as utilized by any Regulatory Authority under such Regulatory Authority’s procedures regarding
the recall of pharmaceutical products, as the same may be amended from time to time, and shall include any post-sale warning or
mailing of information regarding such product, including any warnings or mailings described in the Regulatory Authority’s
product recall procedures.
1.124. “ Receiving Party ” has the meaning set forth in Section 8.2.
1.125. “ Registrational Filing ” means an application submitted to a Regulatory Authority seeking a Regulatory
Marketing Approval.
1.126. “ Regulatory Approval ” means, in respect of a particular country, the technical, medical and scientific licenses,
registrations, authorizations and approvals of any Regulatory Authority necessary for the Development, clinical testing,
Manufacture, distribution, marketing, promotion, offering for sale, use, import, export, sale or other Commercialization of a drug
product in such country, including INDs, NDAs, Biologic License Applications, Registrational Filings, supplements and
amendments, pre- and post- approvals, Drug Price Approval, drug naming approvals, Product Labeling approvals, and drug
master files.
1.127. “ Regulatory Authority ” means, with respect to a particular country, any national (e.g., the FDA), supra-national
(e.g., the European Commission, the Council of the European Union, or the European Agency for the Evaluation of Medicinal
Products), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity
involved in the granting of a Regulatory Approval for such country.
1.128. “ Regulatory Documentation ” means, in respect of a particular drug product, (a) the trial master file and all
regulatory files relating to the Development, Regulatory Approval, Manufacture or Commercialization of the product, including
any licenses (to the extent transferable), minutes of meetings and telephone conferences with any Regulatory Authorities,
validation data, preclinical and clinical studies and tests related to the product (including all audit reports of clinical studies and
all other Clinical Data), all applications (and amendments thereto) for Regulatory Approvals, annual reports and safety reports
associated therewith, and all correspondence with Regulatory Authorities regarding the marketing status of the product; and
(b) all records maintained under cGMP or other Applicable Law, including record keeping or
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
20
reporting requirements of Regulatory Authorities, all correspondence and communications with Regulatory Authorities in
connection with the product, including those relating to any Product Labeling or Promotional Materials, adverse event files,
complaint files or manufacturing records.
1.129. “ Regulatory Marketing Approval ” means, in respect of a particular country, a Regulatory Approval authorizing
the marketing of a drug product in such country for any indication. For the sake of clarity, Regulatory Marketing Approval
(a) shall be deemed to have occurred when (i) the Regulatory Authority sends a notification of such Regulatory Marketing
Approval to the applicant seeking Regulatory Marketing Approval or, (ii) if Applicable Law provides for authorization for the
marketing of a drug product by an action or event other than a notification, then when such action or event has been taken or
occurred, and (b) shall not require that Drug Price Approval or any other Regulatory Approval has occurred.
1.130. “ Related Agreements ” has the meaning set forth in Section 13.6.
1.131. “ RELISTOR Marks ” has the meaning set forth in Section 9.2(m).
1.132. “ Royalty Period ” means, with respect to any particular Product in any particular country, the period of time
beginning with the [*] and extending until the later of
(a) the expiration of the last to expire of any Valid Claim included in any [*] which, in any such case, would be
infringed by an unlicensed Third Party’s Manufacture, use, sale, importation, Development or Commercialization of such
Product in the Field in such country;
(b) the date on which there is no marketing exclusivity right with respect to the Product [*]; and
(c) the fifteenth (15th) anniversary of the First Commercial Sale [*]; provided, however , that notwithstanding the
foregoing, the period set forth in this clause (c) with respect to any particular Product in any particular country shall
terminate effective as of the first day of any Quarter in which either
(i) (A) one or more Persons other than Salix or Salix’s Affiliates or Sublicensees sell one or more Unauthorized
Generic Products in respect of such Product in such country, and (B) the unit sales of such Unauthorized Generic Product(s) in
such country during such Quarter amount in the aggregate to more than [*] percent ([*]%) of the Unauthorized Generic Product
Market in such country for the relevant Product (excluding, for purposes of this clause (i) only, clause (b) from the definition of
“Unauthorized Generic Product Market”); or
(ii) (A) one or more Persons other than Salix or Salix’s Affiliates or Sublicensees sell one or more Unauthorized
Generic Products in such country that would be included in the determination of the Unauthorized Generic Product Market for
the relevant
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
21
Product in such country, and (B) the unit sales of such Unauthorized Generic Product(s) in such country during such Quarter
amount in the aggregate to more than [*] percent ([*]%) of the Unauthorized Generic Product Market in such country for the
relevant Product;
but shall resume, in the case where termination was triggered pursuant to clause (i), if Progenics demonstrates to the reasonable
satisfaction of Salix, using independent data from IMS or Wolters Kluwer or such similar organization reporting pharmaceutical
sales information as the Parties may agree, that the unit sales of such Unauthorized Generic Product(s) in respect of such
Product in such country have fallen below [*] percent ([*]%) of the Unauthorized Generic Product Market in such country for
the relevant Product (excluding, for such purpose only, clause (b) from the definition of “Unauthorized Generic Product
Market”) for at least [*] ([*]) consecutive [*] or, in the case where termination was triggered pursuant to clause (ii), if Progenics
demonstrates to the reasonable satisfaction of Salix, using independent data from IMS or Wolters Kluwer or such similar
organization reporting pharmaceutical sales information as the Parties may agree, that the unit sales of such Unauthorized
Generic Product(s) in respect of such Product in such country have fallen below [*] percent ([*]%) of the Unauthorized Generic
Product Market in such country for the relevant Product for at least [*] ([*]) consecutive [*]. If the period set forth in this clause
Product Market in such country for the relevant Product for at least [*] ([*]) consecutive [*]. If the period set forth in this clause
(c) resumes pursuant to the proviso clause in the preceding sentence, then such resumption shall occur effective as of the date
(either during or after such [*] ([*]) [*] period) on which Salix receives notice from Progenics that the requirements for
resumption as set forth in such proviso clause have been satisfied.
By way of example, if during a Quarter in country X:
[*].
1.133. “ Safety Agreement ” has the meaning set forth in Section 12.7.
1.134. “ Salix ” has the meaning set forth in the first paragraph hereof.
1.135. “ Salix COGs ” has the meaning set forth in Schedule 1.135 .
1.136. “ Salix Collaboration Know-How ” means any Know-How relating to the Compound or any Product, as and to the
extent Controlled at any time during the Term by Salix or its Affiliates (as determined in accordance with Section 7.1(a)), that is
made or created in the course of and arising out of the Collaboration solely by employees or agents of Salix or any of its
Affiliates or Sublicensees.
1.137. “ Salix Collaboration Patent Rights ” means any Patent Right, as and to the extent subsisting and as and to the
extent Controlled at any time during the Term by Salix or its Affiliates, that claims inventions made solely by employees or
agents of Salix or any of its Affiliates or Sublicensees (as determined in accordance with Section 7.1(a)) in the course of and
arising out of the Collaboration that, if issued, would be infringed by an unlicensed Third Party’s Manufacture, use, sale,
importation, Development or Commercialization of the Compound or any Product.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
22
1.138. “ Salix Collaboration Technology ” means Salix Collaboration Know-How and Salix Collaboration Patent Rights.
1.139. “ Salix Competitor ” means any of those companies set forth in Schedule 1.139 , and their successors.
1.140. “ Salix Indemnified Party ” has the meaning set forth in Section 11.2.
1.141. “ Salix Independent Patent Rights ” means any Patent Right, as and to the extent subsisting and as and to the
extent Controlled by Salix or its Affiliates, that, if issued, would be infringed by an unlicensed Third Party’s Manufacture, use,
sale, importation, Development or Commercialization of the Compound or any Product, other than the Progenics Patent Rights,
Joint Patent Rights, Wyeth Collaboration Patent Rights, Wyeth Collaboration Joint Patent Rights, Ono Collaboration Patent
Joint Patent Rights, Wyeth Collaboration Patent Rights, Wyeth Collaboration Joint Patent Rights, Ono Collaboration Patent
Rights, Ono Collaboration Joint Patent Rights, and Salix Collaboration Patent Rights.
1.142. “ Salix Non-Defaulting Termination ” has the meaning set forth in Section 13.22(b).
1.143. “ SEC” has the meaning set forth in Section 8.4.
1.144. “[ * ] ” has the meaning set forth in Section [*].
1.145. “ SPC ” has the meaning set forth in the definition of Patent Term Extension.
1.146. “ Specified Product ” has the meaning set forth in Section 1.168.
1.147. “ Subject Agreements ” means the [*] Agreement, the [*] Agreement and related agreements, the [*] Agreement,
and the [*] Agreement.
1.148. “ Subject Country ” has the meaning set forth in Section 9.2(n)(iv).
1.149. “ Subject Documentation ” has the meaning set forth in Section 9.2(n)(i).
1.150. “ Subject Law ” has the meaning set forth in Section 9.2(n)(iv).
1.151. “ Sublicense ” means, directly or indirectly, to sublicense, grant any other right with respect to, or agree not to
assert, any right licensed to Salix under this Agreement. When used as a noun, “Sublicense” means any agreement to
Sublicense.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
23
1.152. “ Sublicense Revenue ” means all payments directly or indirectly by or on behalf of a Sublicensee to Salix or its
Affiliates relating to, or resulting from, in either case directly or indirectly, an arrangement respecting any one or more of a
Sublicense or Compound or Product or sales thereof, including (a) all upfront and other payments payable to Salix upon
execution of a Sublicense with a Sublicensee in respect of Salix’s rights hereunder; (b) all development, regulatory,
commercialization or other milestone payments for milestones under any such Sublicense; (c) all license maintenance fees under
any such Sublicense; (d) all payments to Salix for the supply of Products; (e) all payments to Salix under any such Sublicense
for the reimbursement of research and development costs incurred by Salix; (f) the fair market value of any equity securities
issued in respect of any such Sublicense to Salix that exceeds any amount paid by Salix for such securities; (g) the amount by
which any amount paid by a Sublicensee to Salix for equity securities issued to such Sublicensee in respect of any such
Sublicense exceeds the fair market value of such equity securities; (h) all royalties, profit share payments and other payments
Sublicense exceeds the fair market value of such equity securities; (h) all royalties, profit share payments and other payments
based on the sales of Products; and (i) the fair market value of any other form of consideration paid to Salix by a Sublicensee for
a Sublicense granted by Salix pursuant to this Agreement, but excluding in all cases Salix COGs to procure or Manufacture
Products for which payments under clause (d) above are made to Salix and Salix’s actual cost to perform activities in and
specifically for the sublicensed territory for which payments under clause (e) above are made to Salix. The amount of Sublicense
Revenue for any Quarter shall be reduced by any amount of Sublicense Revenue previously received by Salix that Salix is
required to return or refund to the payor thereof during such Quarter.
1.153. “ Sublicense Revenue Report ” has the meaning set forth in Section 6.6(b).
1.154. “ Sublicensee ” means any Third Party who is granted a Sublicense.
1.155. “ Sued Party ” has the meaning set forth in Section 7.4(d).
1.156. “ Term ” has the meaning set forth in Section 10.1.
1.157. “ Termination Agreement ” has the meaning set forth in the Background.
1.158. “ Territory ” means the entire world, excluding, subject to the provisions of Section 2.12, Japan.
1.159. “ Third Party ” means any Person other than Salix, the Progenics Parties or their respective Affiliates.
1.160. “ Third Party IP Rights ” has the meaning set forth in Section 7.4(b).
1.161. “ Third Party License ” has the meaning set forth in Section 6.5(d).
1.162. “ Title 11 ” shall have the meaning set forth in Section 10.11.
1.163. “ Trademark ” means any trademark, service mark, trade name, trade dress, brand name, product shape, logo,
slogan, design, design rights, or any other similar designation of source or origin, whether or not registered, and all statutory
and common law rights therein and registrations and applications therefor, together with all goodwill symbolized by any of the
foregoing.
24
1.164. “ Trademark Countries ” has the meaning set forth in Section 9.2(m)(ii).
1.165. “ Transition Agreement ” has the meaning set forth in Section 5.2(a).
1.166. “[ * ]” has the meaning set forth in Section [*].
1.166. “[ * ]” has the meaning set forth in Section [*].
1.167. “ Unauthorized Generic Product ” means, with respect to any Product, on a Product-by-Product basis, a
pharmaceutical product (other than the Product itself) sold by an unlicensed Third Party that contains the Compound and gains
Regulatory Marketing Approval for one of the same indications as such Product without de novo evidence of safety and
efficacy, such as through an abbreviated new drug application as defined in 21 U.S.C. 355(j) or an application submitted
pursuant to 21 U.S.C. 355(b)(2) (or their equivalent outside the United States).
1.168. “ Unauthorized Generic Product Market ” means, for any Quarter with respect to any Product in any country in
the Territory (the “ Specified Product ”), [*]. Unauthorized Generic Product sales shall be determined using independent market
data (where available) published by IMS, Wolters Kluwer or such similar organization reporting pharmaceutical sales
information as the Parties may agree.
1.169. “ United States, ” “ U.S. ” or “ USA ” means the United States of America, its territories and possessions, including
Puerto Rico.
1.170. “ University of Chicago ” has the meaning set forth in Section 2.4(a).
1.171. “ UR Labs ” has the meaning set forth in Section 13.22.
1.172. “ UR Labs-Progenics Agreement ” has the meaning set forth in Section 13.22.
1.173. “ Valid Claim ” means, with respect to a particular Product and country, a claim of a patent application or an issued
and unexpired patent that has not lapsed, been canceled or become abandoned or been held unpatentable, revoked,
unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or
unappealed within the time allowed for appeal (except, in both cases, to the United States Supreme Court or any similar court of
final appeal that hears matters at its discretion in a jurisdiction other than the United States), and that has not been admitted to
be invalid or unenforceable through reissue, disclaimer or otherwise. If a claim of a pending patent application has not issued as
a claim of an issued patent within [*] ([*]) years after the earliest priority date for such claim, then such claim shall cease to be a
Valid Claim unless and until such claim becomes an issued claim of an issued patent.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
25
1.174. “ Voting Stock ” has the meaning set forth in the definition of Change in Control.
1.175. “ Wyeth ” means Wyeth LLC, a Delaware limited liability company, or as appropriate, collectively Wyeth, acting
through Wyeth Pharmaceuticals Division, Wyeth Whitehall Pharmaceuticals, Inc. and Wyeth Ayerst Lederle, Inc.
through Wyeth Pharmaceuticals Division, Wyeth Whitehall Pharmaceuticals, Inc. and Wyeth Ayerst Lederle, Inc.
1.176. “ Wyeth Additional Licensed Rights ” means those Patent Rights, Know-How and other rights under which Wyeth
grants a license to Progenics as provided in Section 6.4.1 of the Termination Agreement.
1.177. “ Wyeth Agreement ” has the meaning set forth in the Background.
1.178. “ Wyeth Collaboration Joint Know-How ” means the “Joint Know-How” as such term is defined in the Wyeth
Agreement, as and to the extent such rights are Controlled by Progenics or its Affiliates as of the Effective Date or at any time
during the Term, which relates to the Compound or a Product or to the use of the Compound or a Product.
1.179. “ Wyeth Collaboration Joint Patent Rights ” means the “Joint Patent Rights” as such term is defined in the Wyeth
Agreement, as and to the extent such rights subsist and as and to the extent Controlled by Progenics or its Affiliates as of the
Effective Date or at any time during the Term, which relate to the Compound or a Product or to the use of the Compound or a
Product.
1.180. “ Wyeth Collaboration Know-How ” means the “Wyeth Collaboration Know-How” as such term is defined in the
Wyeth Agreement, as and to the extent Controlled by Progenics or its Affiliates as of the Effective Date or at any time during
the Term, which relates to the Compound or a Product or to the use of the Compound or a Product.
1.181. “ Wyeth Collaboration Patent Rights ” means the “Wyeth Collaboration Patent Rights” as such term is defined in
the Wyeth Agreement, as and to the extent such rights subsist and as and to the extent Controlled by Progenics or its Affiliates
as of the Effective Date or at any time during the Term, which relate to the Compound or a Product or to the use of the
Compound or a Product.
1.182. “ Wyeth Independent Patent Rights ” means the “Wyeth Independent Patent Rights” as such term is defined in the
Wyeth Agreement.
1.183. “[ * ] Patent Rights ” means those Patent Rights to be licensed by [*] to Progenics pursuant to a Third Party
Agreement contemplated between [*] and Progenics, as and to the extent such Patent Rights subsist and claim inventions made
on or prior to the Effective Date and as and to the extent Controlled by Progenics, Progenics’s Affiliates, Salix or Salix’s
Affiliates as of the Effective Date or at any time during the Term.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
26
2. LICENSE GRANTS AND RELATED MATTERS
2.1. License from Progenics to Salix. Subject to the terms and conditions of this Agreement, the Progenics Parties hereby
grant to Salix, and Salix hereby accepts in respect of the Licensed Technology and the Progenics Parties’ interest in the Joint
Technology:
Technology:
(a) the exclusive license, even as to the Progenics Parties and their Affiliates, with the right to grant Sublicenses in
accordance with Section 2.2, (i) to Develop the Compound and Products in the Territory for use and Commercialization in the
Field in the Territory and (ii) to Commercialize Products in the Field in the Territory; and
(b) a non-exclusive license, with the right to grant Sublicenses in accordance with Section 2.2, to Manufacture or
have Manufactured in the Territory (i) Products for use or Commercialization by Salix and its Sublicensees under the license
granted under Section 2.1(a) and (ii) Compound for incorporation into such Products.
Salix acknowledges that with respect to any Progenics Technology and any of the Progenics Parties’ rights in the Wyeth
Collaboration Joint Patent Rights, the Wyeth Collaboration Joint Know-How, the Wyeth Collaboration Patent Rights, the
Wyeth Collaboration Know-How, the Ono Collaboration Joint Patent Rights, the Ono Collaboration Joint Know-How, the Ono
Collaboration Patent Rights, the Ono Collaboration Know-How, the Wyeth Additional Licensed Rights, and the Ono Additional
Patent Rights that are Controlled by the Progenics Parties pursuant to Progenics Third Party Agreements, the license granted in
this Section 2.1 is subject to the rights of the Third Party licensors under such Progenics Third Party Agreements.
Subject to the terms and conditions of this Agreement, Progenics retains the non-exclusive, non-transferable, non-licensable
right under the Progenics Technology and Joint Technology solely to make, have made, import, export and use the Compound
and Develop the Compound and the Products, in each case solely for the purpose of performing its obligations under this
Agreement.
2.2. Sublicenses.
(a) The licenses granted to Salix in Section 2.1 shall include the right to grant Sublicenses through multiple tiers of
Sublicensees (i) in the Human Field in the Territory other than the United States and (ii) in the Non-Human Animal Field in
the Territory. In order to facilitate the operation of the provisions of Section 6.4, Salix agrees that it will not “bundle” a
Product for Sublicensing with one or more other products that are not Products or offer a Product for Sublicensing to
encourage the licensing or sublicensing by the Sublicensee of one or more products that are not Products without first
reaching an agreement with Progenics, to be negotiated between Progenics and Salix in good faith, in respect of the
appropriate allocation, in accordance with Applicable Law, the definition of “Sublicense Revenue,” and Section 6.4, of the
gross amount to be received by Salix under any such arrangement between the Product and other products in the bundle or
group.
27
(b) Salix shall, to the extent practical, inform Progenics reasonably in advance of the execution of any Sublicense
that Salix expects to grant under this Agreement in respect of a Major Market Country or [*] or [*] and shall promptly (and, in
the case of material items, within [*] ([*]) Business Days) provide to Progenics (i) notice of any Sublicense granted by Salix
under this Agreement setting forth in reasonable detail the nature of such Sublicense and the identity of the Sublicensee and
(ii) unredacted English-language copies of any agreement with a Third Party granting such Sublicense.
(c) Each Sublicense entered into by Salix shall contain (i) confidentiality, exclusivity, reporting and access to data
and information obligations comparable to those set forth herein as and to the extent relevant to the exercise by Progenics of
its rights hereunder, and (ii) provisions adequate to ensure that (A) neither of the Parties will be precluded during or after the
Term from Manufacturing, Developing and Commercializing the Compound or Products as contemplated hereby pursuant to
the Licensed Technology and the licenses granted pursuant hereto as a result of any invention, development or discovery,
as and to the extent Controlled by the Sublicensee or its Affiliates, that is made or created in the course of or arising out of
Manufacturing, Development and Commercialization activities of the Sublicensee or any of its Affiliates or Sublicensees
under the relevant Sublicense, (B) the Progenics Parties shall have the benefit of all indemnification rights, if any, provided to
Salix under such Sublicense, (C) the amount of Sublicense Revenue in respect of such Sublicense paid to Progenics pursuant
to Section 6.4 shall at no time be less than the amount, if any, Progenics or an Affiliate is required to pay as royalties in
respect of sales of Products pursuant to such Sublicense to the University of Chicago under the 1985 Agreement and to [*]’s
heirs under the [*] Agreement (as such agreements exist on the Effective Date), and (D) Progenics will be provided or have
access to net sales information in respect of sales of Products pursuant to such Sublicense sufficient to satisfy Progenics’
reporting obligations under the 1985 Agreement and the [*] Agreement (as such agreements exist on the Effective Date). For
the avoidance of doubt, in respect of the operation of clause (C) of this Section 2.2(c)(ii) the Parties agree and acknowledge
that the combined effective royalty rate under the 1985 Agreement and the [*] Agreement as such agreements exist on the
Effective Date for the [*] and [*] is [*]%.
(d) Salix hereby guarantees the performance of its Sublicensees and shall remain responsible to Progenics for full
compliance with the terms of this Agreement, including all diligence, payment and reporting obligations. No Sublicense
granted by Salix hereunder shall relieve Salix of any of its obligations under this Agreement.
(e) The Parties agree that appointment by Salix of any bona fide pharmaceutical wholesalers or providers of
pharmaceutical distribution services shall not constitute a sublicense for purposes of this Section 2.2.
2.3. Direct Licenses to Affiliates. Salix may at any time request and authorize Progenics to grant licenses in respect of the
rights licensed to Salix in Section 2.1 (including the
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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right to Sublicense as set forth in Section 2.2) directly to wholly owned Affiliates of Salix by giving notice designating to whom
a direct license is to be granted. Upon receipt of any such notice, Progenics shall enter into and sign a separate direct license
agreement with such designated Affiliate of Salix. All such direct license agreements shall be consistent with the terms and
conditions of this Agreement, except for such modifications as may be required by Applicable Law; provided, however, that
Progenics shall have no obligation to enter into any such direct license agreement if the effect of entering into such agreement
Progenics shall have no obligation to enter into any such direct license agreement if the effect of entering into such agreement
(and continuing as a Party to this Agreement) would be to increase the level of obligations owed by or risks assumed by
Progenics, or decrease the consideration owed to Progenics, relative to the obligations owed by, risks assumed by, or
consideration owed to Progenics under this Agreement or otherwise adversely affect Progenics. In countries where validity of
the direct license agreement requires governmental approval or registration, such direct license agreement shall not become
binding between the parties thereto until such approval or registration is granted, which approval or registration shall be
obtained by Salix. All costs of making a direct license, including Progenics’s reasonable attorneys fees, under this Section 2.3
shall be borne by Salix. Salix shall be responsible to Progenics for the performance of its Affiliates under such direct licenses.
2.4. Certain Matters Relating to the University of Chicago.
(a) The Parties hereby acknowledge that, pursuant to that certain [*] dated as of [*] by and among the University
of Chicago, on behalf of itself and its affiliate ARCH Development Corporation (the “ University of Chicago ”), and [*] shall
(i) [*] and (ii) if [*].
(b) The Parties hereby acknowledge that [*]. The Parties further acknowledge that, pursuant to Section [*] of the
[*] and Section [*] of the [*].
2.5. License from Salix to Progenics. Salix hereby grants to Progenics an exclusive, perpetual, irrevocable, royalty-free,
fully paid-up license under the Salix Collaboration Patent Rights and the Salix Collaboration Know-How, and an exclusive,
perpetual, irrevocable, royalty-free, fully paid-up license under Salix’s interest in the Joint Patent Rights and Salix’s interest in
the Joint Know-How, in each case with a right to sublicense, to research, make, have made, use, Develop, sell, offer to sell or
use, have sold, market, promote, import, export, or otherwise Commercialize the Compound or any Products outside the Field or
outside the Territory, without any compensation or royalty relating thereto. Progenics shall timely notify Salix of any
sublicenses. An agreement with any sublicensee shall provide that such sublicense is consistent with and subject to the
material terms and conditions of this Agreement, including without limitation the material obligations of Progenics hereunder.
2.6. Enforcement of Non-Assertion of Rights Covenants . Each Progenics Party shall cooperate with Salix and take such
actions as Salix may reasonably request, and Salix shall reimburse each Progenics Party’s reasonable costs resulting from
actions so requested, as may be necessary to permit Salix to exercise, for the benefit of Salix and its Affiliates and Sublicensees,
the Progenics Parties’ rights (a) under the Termination Agreement to prevent Wyeth from
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asserting any Wyeth Independent Patent Rights against the Progenics Parties or any of their licensees and (b) under the Ono
Agreement to prevent Ono from asserting any Ono Independent Patent Rights against the Progenics Parties or any of their
licensees. For the avoidance of doubt, this Section 2.6 shall require the Progenics Parties to consent to be joined, with the
Progenics Parties’ reasonable costs to be reimbursed by Salix, as a party to any action required to enforce the rights identified in
the preceding sentence, but shall not obligate any Progenics Party to indemnify or defend Salix in respect of any such action.
2.7. Non-Assertion of Progenics’s Rights; Non-Exclusive License Grant; Non-Assertion by Salix .
(a) Non-Assertion of Progenics’s Rights. Progenics shall not, and shall cause its Affiliates not to, bring any action
asserting that the exercise by Salix, its Affiliates or Sublicensees of the rights granted by Progenics to Salix under this
Agreement infringes or would infringe any Patent Rights Controlled by Progenics or its Affiliates.
(b) Non-Exclusive License from Salix to Progenics. In the event that the exercise by Progenics, its Affiliates,
licensees (including Ono), or sublicensees of the rights granted by Salix in Section 2.5 would infringe any Patent Rights
Controlled by Salix or its Affiliates, and which Patent Rights are not covered by the grant in Section 2.5, Salix hereby grants
to Progenics, its Affiliates, licensees and sublicensees to the extent Salix is legally able to do so, a non-exclusive,
sublicensable, royalty-free license outside the Territory under such Patent Rights solely to the extent necessary for
Progenics, its Affiliates, licensees and sublicensees to exploit the rights granted to Progenics and its Affiliates under
Section 2.5.
(c) Non-Assertion by Salix. Salix shall not assert any Salix Independent Patent Rights against Progenics, its
Affiliates or its licensees or sublicensees relating to the Development, Commercialization or other exploitation of the
Compound or any product containing the Compound outside the Territory or outside the Field.
2.8. Fully Paid-Up, Royalty Free License. After expiration of the Royalty Period for any Product in a particular country, the
license granted to Salix under Section 2.1 with respect to such Product in such country shall be a fully paid-up, perpetual, non-
exclusive, irrevocable, royalty-free license.
2.9. Know-How Disclosure and Transfer.
(a) By Progenics . Commencing immediately after the Effective Date, Progenics shall as promptly as reasonably
practicable disclose the then-existing Licensed Know-How in its Control to Salix. During the Term, Progenics shall promptly
disclose to Salix all Licensed Know-How and Joint Know-How, in each case that is developed by Progenics or otherwise
comes into Progenics’s Control. Disclosure of Know-How by
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Progenics as provided in this Section 2.9(a) shall be accomplished through: (i) the transfer of [*] and [*]; and (ii) the delivery
of [*] and [*]. In addition, Progenics shall use Commercially Reasonable Efforts to cause Wyeth and Ono to provide, for
delivery to Salix, relevant [*] and [*]. The provisions of this Section 2.9 are in addition to, and not by way of limitation of, the
provisions of the Transition Agreement.
(b) By Salix . During the Term, Salix shall promptly disclose to Progenics any Joint Know-How and Salix
Collaboration Know-How.
2.10. Costs of Assistance. Each Progenics Party shall perform the activities it is required to perform under Sections 2.6 and
2.9(a), Article 3, Sections 4.5 and 4.6, Section 5.2(c) and (d) and Articles 7 and 12, except as otherwise specifically provided
therein, at no charge to Salix. If Salix shall request that a Progenics Party perform any other activities in connection with the
Collaboration or the Commercialization and Development of the Compound or any Product, then Salix shall reimburse the
applicable Progenics Party for any and all costs the Progenics Party incurs, including out-of-pocket costs (including travel) and
personnel costs at the FTE Rate. Salix shall reimburse the applicable Progenics Party for such costs within [*] ([*]) days of
Salix’s receipt of an invoice therefor accompanied by reasonable documentation. Salix shall have no obligation to reimburse any
Progenics Party for any costs that may be incurred by the Progenics Parties or their Affiliates in respect of any activity, whether
or not relating to the Collaboration, that is not specifically requested by Salix in writing.
2.11. No Implied Rights. Except as expressly provided in this Agreement, neither Party shall be deemed to have granted
the other Party any license or other right with respect to any intellectual property of such Party.
2.12. Japan. Provided that Salix is at such time in compliance in all material respects with its obligations under this
Agreement, in the event that at any time the Ono Agreement should terminate or be modified with the result that rights in
respect of the Development, Commercialization or Manufacture of Products in Japan licensed or otherwise granted by Progenics
to Ono pursuant to the Ono Agreement revert to or otherwise come to be Controlled, directly or indirectly and in any manner
whatsoever, by Progenics or its Affiliates, then the terms of this Agreement shall automatically, without further action by either
Party and without any further payment by or on behalf of Salix, be, and they are hereby, amended to expand and extend the
license grants, territory and other rights of Salix set forth in this Agreement to cover and include the license grants, territory and
other rights so reverting to or otherwise coming to be Controlled, directly or indirectly, by Progenics or its Affiliates. In
connection with any acquisition by Salix of rights in respect of Japan pursuant to this Section 2.12, Progenics shall use its good
faith efforts to ensure the transfer and conveyance to Salix of all such rights in Regulatory Approvals, trademarks, trade names
and similar intellectual property rights, rights under Third Party agreements relating to Products or their Development,
Commercialization or Manufacture, and Clinical Data, Know-How and other information relating to Products, in each case
relating to Japan, which Progenics may Control or have the right to transfer or assign or with respect to which Progenics may
reasonably be able to obtain Control or the right to transfer or assign.
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2.13. Other Progenics Products.
(a) New Progenics Opioid-Induced Constipation Product. Progenics agrees that, in the event it or any of its
Affiliates desires to grant a license or similar right to a Third Party in respect of any product or compound (other than the
Compound or Products) that is Developed, or that Progenics or any of its Affiliates intends to Develop or Commercialize or
permit to be Developed or Commercialized, in respect of the diagnosis, treatment or prevention of opioid-induced
constipation (a “New Progenics OIC Product ”), Salix shall have a right of first negotiation with respect to such license, as
follows:
(i) Progenics shall not, and shall cause its Affiliates not to, enter into any agreement or other legally binding
arrangement with any Third Party in respect of the grant of a license or other right by Progenics or any of its Affiliates to permit
the Development or Commercialization of a New Progenics OIC Product without first having complied with the provisions of
this Section 2.13.
(ii) In the event Progenics or any of its Affiliates should propose to grant any such license or other right,
Progenics shall notify Salix of the proposed grant (the “ License Notice ”). Salix may exercise its right of first negotiation in
respect of such proposed grant by means of notice given to Progenics within [*] ([*]) days of the date of the License Notice.
(iii) In the event Salix provides timely notice of its exercise of its right of first negotiation, then for a period of
[*] ([*]) days beginning on the date of the License Notice, the Parties shall negotiate in good faith in respect of the terms upon
which the proposed license might be granted by Progenics to Salix. During such [*] ([*]) day period, Progenics shall negotiate
exclusively with Salix and shall not pursue negotiations with, nor provide information regarding the licensing opportunity to,
any other Person.
(iv) If (A) Salix does not provide timely notice of its exercise of its right of first negotiation or (B) the Parties are
unable to conclude an agreement in respect of such license during the [*] ([*])-day period specified in Section 2.13(a)(iii) and, in
the case of this clause (B), Salix does not notify Progenics that it wishes to continue negotiations with Progenics, Progenics
shall then be free to pursue and enter into agreements with Third Parties and Salix shall have no further rights in respect of such
New Progenics OIC Product.
(v) If the Parties do negotiate pursuant to Section 2.13(a)(iii) but are unable to conclude an agreement in respect
of such license during the [*] ([*])-day period specified in Section 2.13(a)(iii) and Salix notifies Progenics that it wishes to
continue negotiations with Progenics, then the Parties shall continue to negotiate in good faith but
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Progenics shall be free from and after the end of such [*] ([*])-day period to negotiate and enter into agreements with Third
Parties on terms no less favorable to Progenics, as a whole and using consistent methodology and taking into account the
capabilities and resources and expected performance of Salix and such Third Party, than those offered by Salix; provided,
however, that if Progenics does not enter into an agreement within [*] ([*]) months after the date of the License Notice, then
Progenics must, after such date, provide Salix with a new License Notice and must again fulfill the other requirements of this
Section 2.13(a) if it or any of its Affiliates desires to grant a license or other right to a Third Party to permit the development or
commercialization of such New Progenics OIC Product. Progenics shall provide to Salix the same data and information package
relating to any licensing opportunity that is the subject of a License Notice as it provides to any Third Party in respect of such
relating to any licensing opportunity that is the subject of a License Notice as it provides to any Third Party in respect of such
opportunity.
(b) Other New Progenics Products . Progenics agrees that, if at any time prior to a Change in Control of Salix,
Progenics or any of its Affiliates desires to grant a license or similar right to a Third Party in respect of any product or
compound (other than the Compound or Products) that is not a New Progenics OIC Product, it shall provide Salix with notice
and information in respect of such product or compound reasonably in advance of granting such license or similar right to a
Third Party and, at Salix’s request, shall provide Salix with an opportunity to propose and discuss a potential licensing or
collaboration arrangement between Progenics and Salix in respect of such product or compound. Nothing in this clause
(b) shall obligate Progenics to enter into any agreement with Salix in respect of any product or compound addressed hereby
or condition or delay Progenics’s right to pursue discussions with any other Person in respect of a license or similar right in
respect of any product or compound as to which it may have provided a notice to Salix hereunder.
3. GOVERNANCE OF COLLABORATION
3.1. Joint Committees.
(a) Creation . Within [*] ([*]) days following the Effective Date, the Parties shall establish a Joint Steering
Committee (“ JSC ”) to oversee, review and coordinate the Development, Manufacture and Commercialization of Products in
the Territory and a Joint Development Committee (“ JDC ”) to oversee, review and coordinate the Development of Products
in the Territory (each of the JSC and JDC, a “ Committee ”, and collectively, the “ Committees ”). The Committees shall serve
solely as a forum for the regular exchange of information between the Parties and shall have no authority to bind, or limit the
rights of, either Party.
(b) Functions of JSC . Without limiting Section 3.1(a) or any other functions the Parties agree to delegate to the
JSC, the JSC shall:
(i) consider [*];
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(ii) review [*] and [*];
(iii) review and approve [*] and [*], and seek to [*];
(iv) discuss and approve [*] and [*];
(v) review [*];
(v) review [*];
(vi) discuss and analyze any [*] or [*];
(vii) decide whether [*];
(viii) establish [*] or [*];
(ix) discuss and consider from time to time as appropriate [*]; and
(x) otherwise facilitate [*] between [*].
(c) Functions of JDC . Without limiting Section 3.1(a) or any other functions the Parties agree to delegate to the
JDC, the JDC shall:
(i) establish [*];
(ii) review [*];
(iii) review and discuss [*];
(iv) review and approve [*];
(v) review [*];
(vi) establish [*];
(vii) if the JSC determines it is advisable to [*], establish [*];
(viii) facilitate the exchange of [*];
(ix) support [*]; and
(x) provide [*].
3.2. Membership. Each of the JSC and JDC shall be comprised of [*] ([*]) representatives from each of Salix and Progenics,
selected by such Party. Each of Salix and Progenics may replace either or both of its representatives on such Committees at any
time by providing prior notice to the other Party. Other representatives of Salix or Progenics may attend
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Committee meetings as non-voting attendees; provided that such representatives are bound by obligations of confidentiality
and non-use with respect to any Confidential Information disclosed in the course of such meetings at least as stringent as those
set forth in this Agreement.
3.3. Committee Meetings. Each Committee shall meet (a) quarterly until [*] ([*]) [*] after the Effective Date and thereafter
[*] and (b) as otherwise determined by the chairperson. Such meetings shall be joint meetings of the Committees if so requested
by the chairperson, and shall be conducted in person or by videoconference or teleconference. In-person meetings shall [*]. A
quorum of the Committee shall exist whenever there is present at or participating in a meeting at least one representative
appointed by each Party. Each Party shall bear its own personnel and travel costs and expenses relating to Committee meetings.
Each Committee shall follow such other administrative procedures as it may adopt for the efficient conduct of its meetings and
other matters.
3.4. Committee Officers; Minutes.
(a) Salix shall select one of its representatives on each Committee to be the chairperson of such Committee. The
chairperson shall call meetings of the Committee no less frequently than contemplated by Section 3.3, prepare and circulate
an agenda for each meeting reasonably in advance (have due regard to any relevant circumstances) of such meeting, and
chair all meetings of the Committee. The chairperson may, in his or her absence, delegate responsibility for chairing meetings
of the Committee to the other Salix representative on such Committee.
(b) Progenics shall select a secretary to prepare and circulate the meeting agendas and minutes. Such minutes shall
be distributed in draft form not later than [*] ([*]) days following each meeting and shall be deemed accepted and effective
unless Salix has objected to the same within [*] ([*]) days of its receipt of such minutes. Any such objection shall be noted in
the minutes. Final minutes shall be promptly distributed to the Parties.
3.5. Decision-Making.
(a) For the avoidance of doubt, neither Committee shall have the power to amend the terms of this Agreement,
which amendment may occur only in compliance with the procedures set forth in Section 13.7.
(b) The members of each Committee shall endeavor to reach a consensus on all decisions within its jurisdiction. All
official actions, decisions or rulings of each Committee must be made by a consensus of the members of the Committee or in a
writing signed by at least one Committee representative of each Party.
(c) If the members of either Committee cannot reach consensus with respect to any action, decision or ruling within
[*] ([*]) days (or such shorter time as may be
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reasonable under the circumstances) following the day that such Committee first considers such matter, then the issue shall
be finally and definitively resolved by the chairperson of such Committee; provided, however, that in the event that the
matter for which consensus is not reached relates to an action or proposed amendment of the Commercialization Plan or the
Development Plan that would have the effect of making the Commercialization Plan inconsistent with the Initial
Commercialization Outline or the Development Plan inconsistent with the Initial Development Outline, as applicable, then the
issue shall not be finally and definitively resolved by the chairperson but instead shall be finally and definitively resolved
according to the procedures set forth in Section 13.12 hereof.
3.6. Sunset Provision. The Parties acknowledge that the utility and roles of the Committees may evolve over the course of
the Term and that it is appropriate that such evolution be addressed by modifications to the role and operation of the
Committees contemplated in Sections 3.1 through 3.5. For such purpose, either Party may, at any time following the [*] of the
Effective Date, propose by notice to the other Party that some or all of the operations of the Committee(s) be terminated or
modified or the frequency of its meetings be reduced. Upon the giving of any such notice, the Parties shall discuss and act
upon it in good faith and shall, in respect thereof, make such amendments to this Article 3 as may be necessary to reflect their
agreement.
3.7. Oversight by Senior Executives . In addition to and separate from the Committees provided for in Sections 3.1 through
3.6, each of Progenics and Salix shall designate a senior executive officer to oversee matters relating to the Collaboration on
behalf of such Party, to facilitate communications between the Parties (including discussion and planning relating to [*] and the
[*] and [*] of [*], to address any matters as to which the JSC and JDC consultative process has proved unsatisfactory, to be
available to consult with his/her counterpart at the other Party, and generally to manage the Collaboration so as to most
effectively achieve its intent and purposes. Such officers shall be, for Progenics: [*], and for Salix: [*].
4. DEVELOPMENT
4.1. Development Plan. An outline of the Development activities to be performed by Salix under this Agreement is set forth
in Schedule 4.1 (the “ Initial Development Outline ”). Within [*] ([*]) days following the Effective Date, Salix shall prepare a
detailed development plan (the “ Development Plan ”) for the continued Development of Products for the Territory. Such
Development Plan shall be consistent with the Initial Development Outline, including all timelines set forth therein, and shall set
forth the objectives and planned tasks for the Development of Products for the Territory. Progenics shall have the right to
review and provide comments to Salix with respect to such Development Plan. Salix shall consider Progenics’s comments in
good faith. Salix shall notify Progenics of any material changes to the Development Plan prior to implementation of such
changes and shall consider in good faith Progenics’s comments with respect thereto. Notwithstanding the preceding sentence,
Salix shall not make any change to the Development Plan that would have the effect of making the Development Plan
inconsistent with the Initial Development Outline except following consultation with Progenics through the Committees and
subject to Section 3.5(c).
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4.2. Development Responsibilities of Salix.
(a) Costs. Except as contemplated by Section 4.6(c), Salix shall pay one hundred percent (100%) of the costs to
Develop Products for the Territory.
(b) Responsibilities. Salix shall be solely responsible for, and shall:
(i) use Commercially Reasonable Efforts to Develop the Compound and Products in accordance with the
Development Plan, including the performance of the work under the Development Plan in accordance with the estimated
timelines set forth therein;
(ii) undertake all required correspondence and any official communications (except where Progenics may be
required by Applicable Law or Regulatory Authority to communicate) regarding Products with Regulatory Authorities in the
Territory;
(iii) determine, in Salix’s sole discretion, whether or the manner in which to perform any Phase 4 Clinical Trials
for any Product, including any Phase 4 Clinical Trials that may be required by Regulatory Authorities in the Territory, and
thereafter conduct and manage any such Phase 4 Clinical Trials.
(c) Development Coordination.
(i) Progenics shall conduct such Development tasks as Salix may request it to perform as part of the
Development of Products hereunder, subject to such reasonable compensation and other terms as the Parties may agree. For
the avoidance of doubt, the provisions of this Section 4.2(c)(i) do not limit or qualify the provisions of Sections 2.10 and 3.3,
and no compensation or reimbursement of expenses shall be payable by Salix to Progenics in connection with Progenics’s
participation in the Committees.
(ii) Except as contemplated by Section 4.2(c)(i), Progenics shall not conduct, nor shall it permit any of its
Affiliates or, except to the extent required by the provisions of the Ono Agreement as they exist on the Effective Date or as
amended in accordance with the provisions of this Agreement, licensees or sublicensees (other than Salix) to conduct, any
Development with respect to Products except in accordance with a plan that has been approved by the JSC.
(iii) Each Party shall use, and shall cause its Affiliates and, in the case of Progenics, subject to the provisions
of the Ono Agreement as they exist on the Effective Date or as amended in accordance with the provisions of this Agreement,
licensees and Sublicensees (other than the other Party) to use, reasonable efforts consistent with those prevailing in the
pharmaceutical industry to conduct all clinical trials, non-clinical safety studies and all other Development activities relating to
the Compound or Products in such a manner as not to affect adversely the regulatory and commercial potential of Products.
37
(d) Efforts. Salix’s obligations under Section 4.2(b) to use Commercially Reasonable Efforts in Development of
Products will be satisfied if Salix uses Commercially Reasonable Efforts in the Human Field in the Major Market Countries.
Salix shall not be in breach of its obligation under Section 4.2(b) for failing to use Commercially Reasonable Efforts in the
Non-Human Animal Field, in countries other than the Major Market Countries, or in any country other than the United States
in respect of which Salix despite its good faith efforts is unable to enter into a Sublicense as a result of the minimum
Sublicense Revenue requirements set forth in clause (ii)(C) of Section 2.2(c). Furthermore, Salix shall be relieved of its
Sublicense Revenue requirements set forth in clause (ii)(C) of Section 2.2(c). Furthermore, Salix shall be relieved of its
obligation to use Commercially Reasonable Efforts in any particular country with respect to a particular Product if a Third
Party Controls Patent Rights as to which, in the written reasoned opinion of Salix’s outside patent counsel (which written
opinion shall be reasonably acceptable to Progenics), there is a reasonable risk that a court would find the making, using or
selling of such Product in such country to constitute an infringement and Salix or its Affiliates or Sublicensee(s) are unable to
obtain a license under such Patent Rights on commercially reasonable terms or configure the Product so as to avoid
infringement through the use of Commercially Reasonable Efforts.
(e) Unforeseen Events . The Parties recognize that the Development Plan and the objectives to be set forth therein
are based upon numerous assumptions which are not in the control of the Parties. In view of the numerous assumptions
underlying the Development Plan, the proposed timeframe for achieving the objectives and events described in the
Development Plan will be regularly reviewed by the JDC in light of unforeseen matters. In the event that despite the use of
Commercially Reasonable Efforts by the Parties, [*], or other issues beyond the control of the Parties arise that prevent either
Party from fulfilling the objectives of the Development Plan within the timeframe set forth in the Development Plan, the JDC
will discuss any appropriate revisions to the Development Plan, which revisions the other Party shall not unreasonably
oppose, provided that the Party can demonstrate its use of Commercially Reasonable Efforts to Develop the Products.
4.3. Records. Salix and its Affiliates shall maintain, and shall use Commercially Reasonable Efforts to cause (a) their
Outside Contractors to maintain and (b) Salix’s Sublicensees to cause such Sublicensees’ respective Outside Contractors to
maintain, accurate and complete records of all activities related to the Development of Products, consistent with the
responsibilities of Salix under this Agreement, and all results of any trials, studies and other investigations conducted under
this Agreement by or on behalf of Salix, its Affiliates, Sublicensees and Outside Contractors, as applicable.
4.4. Reports on Development.
(a) For so long as Salix continues to Develop a Product under this Agreement, it shall in respect of such Product
provide the JDC with reports containing
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relevant information in reasonable detail regarding [*] and [*], [*], and [*] related to Registrational Filings and Clinical Trials
of such Product conducted or overseen by Salix and its Affiliates and Sublicensees. Such reports shall be provided by Salix
to the JDC as and when such reports are produced by or made available to Salix for its internal use.
(b) In addition, through its representatives on the JSC, each Party shall make reports to the JSC, as and at such time
as such reports are produced by or made available to such Party for its internal use and otherwise on a periodic basis,
updating the JSC as to the status and results of Development efforts of such Party and its licensees and Sublicensees (other
than, in the case of Progenics, Salix and, in the case of Salix, Progenics) with respect to Products.
4.5. Transfer of Data. Without limiting the provisions of Sections 2.9(a) or 12.5(b), as soon as reasonably practicable, but
4.5. Transfer of Data. Without limiting the provisions of Sections 2.9(a) or 12.5(b), as soon as reasonably practicable, but
in any event within [*] ([*]) days, following the Effective Date, Progenics shall, at its expense, provide Salix with access to, and
(to the extent requested by Salix) copies of, all [*] and [*] relating to the Compound and Products to the extent the same is in the
possession or Control of Progenics or its Affiliates. In addition, Progenics shall use Commercially Reasonable Efforts to cause
Wyeth and Ono to provide, for delivery to Salix, relevant [*] and [*] which Wyeth and Ono are obligated, under the Wyeth
Agreement, the Termination Agreement, and the Ono Agreement, respectively, to provide to Progenics. The provisions of this
Section 4.5 are in addition to, and not by way of limitation of, the provisions of the Transition Agreement.
4.6. Ongoing Development Work.
(a) Subject to Ono’s rights under the Ono Agreement and the Initial Development Outline, all ongoing
Development work in respect of the Compound or Products that is being conducted by the Progenics Parties or their
Affiliates or licensees as of the Effective Date, including any pre-clinical or clinical studies and Clinical Studies (as such term
is defined in Section 9.2(p)) identified on Schedule 9.2(p) , shall either, as Salix may direct by notice to the Progenics Parties,
be continued, terminated or transferred and transitioned to Salix.
(b) Subject to the provisions of Section 4.6(c), all ongoing Development work continued by the Progenics Parties
as aforesaid and any termination or transfer and transition of ongoing Development work effected pursuant to Section 4.6(a)
shall be at [*] sole cost and expense at the relevant [*] or the [*], as applicable.
(c) In respect of any ongoing Development work continued by the Progenics Parties as to which the Progenics
Parties continue to have the right to receive reimbursement from Wyeth pursuant to the Termination Agreement, the
Progenics Parties shall remain responsible for all costs and expenses of such Development work up to the amount of
reimbursement that Wyeth is obligated to pay to the Progenics Parties in respect
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thereof under the terms of the Termination Agreement. Salix shall be responsible, in accordance with Section 4.6(b), for any
and all amounts in excess of such amounts that are reimbursable by Wyeth. In the event that the Progenics Parties should be
unable to collect from Wyeth, because of Wyeth’s bankruptcy or insolvency, any amount that Wyeth is required to
reimburse to the Progenics Parties under the Termination Agreement for Development work that has been conducted by the
Progenics Parties as contemplated by the first sentence of this Section 4.6(c), then Salix shall pay such amount to the
Progenics Parties and shall, by virtue of such payment, be subrogated to any rights that the Progenics Parties may have
against Wyeth in respect of the amount so paid.
(d) Each Progenics Party shall reasonably cooperate with Salix to effect the transfer and termination of any ongoing
Development work that Salix directs is to be transferred and transitioned to it. Without limitation, each Progenics Party shall
Development work that Salix directs is to be transferred and transitioned to it. Without limitation, each Progenics Party shall
use its reasonable efforts to assign and delegate to Salix or its Affiliates, as Salix may direct, all of the rights and obligations
of the Progenics Party or its Affiliates or licensees, as the case may be, under such Progenics Third Party Agreements (other
than the Subject Agreements) as Salix may determine are relevant to the conduct of ongoing Development work to be
transferred and transitioned to it. The Progenics Parties and Salix shall use their respective reasonable efforts to obtain the
consent of any relevant Third Party to the assignment and delegation of any such Progenics Third Party Agreement. In
connection with obtaining any such consents, Salix shall cooperate with the Progenics Parties in obtaining from the relevant
Third Party a release of the relevant Progenics Parties from liability under the relevant Progenics Third Party Agreement with
respect to matters arising after the relevant assignment effective date, and, notwithstanding and in addition to the foregoing,
shall, at Salix’s expense, cause the relevant Progenics Parties to be released from liability under the Progenics Third Party
Agreements identified on Schedule 4.6(d) with respect to matters arising after or related to the relevant assignment effective
date. To the extent any such Progenics Third Party Agreement is not assignable without the consent of a Third Party and the
consent of such Third Party cannot be obtained following the reasonable efforts contemplated hereby, the performance
obligations of the Progenics Parties or their Affiliates under such Progenics Third Party Agreement shall, unless not
permitted by such Progenics Third Party Agreement, be deemed to be subcontracted to Salix until such Progenics Third Party
Agreement can be effectively assigned and delegated. If any such consent cannot be timely obtained, (i) the Progenics
Parties shall waive any exclusivity provision contained in the relevant Progenics Third Party Agreement to allow Salix to
enter into its own agreement with the relevant Third Party and (ii) the Progenics Parties and Salix shall cooperate in any
reasonable arrangement designed to provide for Salix the benefits and obligations intended to be assigned or delegated to
and assumed by it in respect of such Progenics Third Party Agreement, including the right to enforce such Progenics Third
Party Agreement for its own account. In furtherance of the foregoing, in respect of any Progenics Third Party Agreement that
cannot be effectively assigned or delegated as contemplated hereby, the Progenics Parties hereby consent to the use by any
Third Party which is a party to such Progenics Third Party Agreement of confidential information, technology and/or Know-
How developed or held by such Third Party under the Progenics Third Party Agreement for the benefit of Salix, subject to
applicable confidentiality and use restrictions. Notwithstanding any of the foregoing provisions of this Section 4.6(d), the
Progenics Parties shall not be obligated to take or to permit to be taken any action which would, in the reasonable judgment
of the Progenics Parties, be likely to result in a breach of any Progenics Third Party Agreement.
40
(e) Any transfer or transition of ongoing Development work from Progenics or its Affiliates or licensees to Salix
pursuant to this Section 4.6 shall not affect the liability of the transferring party for any matters arising prior to the effective
date of such transfer, and Salix shall have no liability in respect of any such matter. Conversely, any such transfer or
transition shall result in Salix, as between it and the transferring party, being liable for all matters arising in respect of such
Development work on or after the effective date of such transfer, provided, however, that, as between Salix and the
transferring party, the transferring party shall remain solely liable for any matters arising before or after such transfer in
respect of Development work transferred by the transferring party to Salix to the extent any such matter is a result of any act
or omission on the part of the transferring party, its Affiliates, licensees, sublicensees or its or their directors, officers,
employees or agents.
employees or agents.
(f) The provisions of this Section 4.6 are in addition to, and not by way of limitation of, the provisions of the
Transition Agreement.
5. COMMERCIALIZATION
5.1. Salix’s Commercialization Responsibilities and Efforts.
(a) Commercialization Plan. An outline of the Commercialization activities to be performed by Salix under this
Agreement is set forth in Schedule 5.1(a) (the “ Initial Commercialization Outline ”). Within [*] ([*]) days following the
Effective Date, Salix shall prepare the Commercialization Plan for the continued Commercialization of Products for the
Territory. Such Commercialization Plan shall be consistent with the Initial Commercialization Outline, including all timelines
set forth therein, and shall set forth the objectives and planned tasks for the Commercialization of Products for the Territory.
Progenics shall have the right to review and provide comments to Salix with respect to such Commercialization Plan. Salix
shall consider Progenics’s comments in good faith. Salix shall notify Progenics of any material changes to the
Commercialization Plan prior to implementation of such changes and shall consider in good faith Progenics’s comments with
respect thereto. Notwithstanding the preceding sentence, Salix shall not make any change to the Commercialization Plan that
would have the effect of making the Commercialization Plan inconsistent with the Initial Commercialization Outline except
following consultation with Progenics through the Committees and subject to Section 3.5(c). Costs. Salix shall pay one
hundred percent (100%) of the costs to Commercialize Products in the Territory.
(b) Responsibilities. Salix shall be solely responsible for the Commercialization of the Products in the Territory and
shall use Commercially Reasonable Efforts to pre-launch, launch, promote, market, distribute, sell in finished pharmaceutical
form, and otherwise Commercialize Products in the Territory in accordance with the
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
41
Commercialization Plan. Salix shall be solely responsible for distribution and pricing of Products in the Territory, either itself
or through its Sublicensees, and shall itself or through its Sublicensees book all sales of Products in the Territory.
(c) Efforts. Salix’s obligations under this Section 5.1 to use Commercially Reasonable Efforts will be satisfied if Salix
uses Commercially Reasonable Efforts in the Human Field in Major Market Countries. Commercially Reasonable Efforts
expended by a Sublicensee in a given country shall satisfy Salix’s efforts obligations in that country. Salix shall not be in
breach of its obligation under this Section 5.1 for failing to use Commercially Reasonable Efforts in the Non-Human Animal
Field, in countries other than the Major Market Countries, or in any country other than the United States in respect of which
Salix despite its good faith efforts is unable to enter into a Sublicense as a result of the minimum Sublicense Revenue
requirements set forth in clause (ii)(C) of Section 2.2(c). Furthermore, Salix shall be relieved of its obligation to use
Commercially Reasonable Efforts with respect to a Product in any particular country if a Third Party Controls Patent Rights as
to which, in the written reasoned opinion of Salix’s outside patent counsel (which written opinion shall be reasonably
acceptable to Progenics), there is a reasonable risk that a court would find the making, using or selling of such Product in
such country to constitute an infringement and Salix or its Affiliates or Sublicensee(s) are unable to obtain a license under
such Patent Rights on commercially reasonable terms or configure the Product so as to avoid infringement through the use of
Commercially Reasonable Efforts.
5.2. Transition; Supply.
(a) Transition Agreement. Simultaneously herewith, the Expanded Parties are entering into a Transition
Arrangements Agreement, of even date herewith (the “ Transition Agreement ”).
(b) Supply. Except as otherwise contemplated by the Transition Agreement, Salix shall be solely responsible at its
expense for the Manufacture and supply of one hundred percent (100%) of the Compound and finished Products for
Development and Commercialization both as bulk API and as finished and packaged products.
(c) Manufacturing and Transfer of Manufacturing Know-How. Progenics will disclose to Salix, Salix’s Affiliates,
and/or Salix’s Third Party contract manufacturer all relevant Progenics Know-How and all Know-How included in the Wyeth
Collaboration Know-How, Wyeth Collaboration Joint Know-How, Ono Collaboration Know-How and Ono Collaboration
Joint Know-How relating to the Manufacture of the Products. Progenics shall use its Commercially Reasonable Efforts to
cause Wyeth to provide Salix with that cooperation, inventory, technology, know-how and documentation set forth in
Section 10.4.1(d) of the Wyeth Agreement. Such Know-How disclosure shall include the transfer of data and information
stored on the computer systems of Progenics for and in respect of Regulatory Marketing Approval for Products.
(d) Assignment of Supply and Manufacturing License Agreements. At Salix’s written request in connection with
the transfer of responsibility for Manufacture under Section 5.2(c), Progenics shall use Commercially Reasonable Efforts to
promptly
42
assign and transfer to Salix any existing supply agreements related to the supply of the Compound or the Products.
Furthermore, to the extent necessary to permit Salix to manufacture the Compound and Products as contemplated by this
Agreement, Progenics shall use Commercially Reasonable Efforts to sublicense to Salix any license agreement under which
Progenics licenses any intellectual rights from any Third Party related to the Manufacture of the Compound or the Products.
If the terms of any of the agreements referred to in the previous two sentences require the consent of the other party thereto
to effect its assignment, then upon Salix’s request for an assignment, until Progenics is able to obtain such consent and
effect such assignment, Progenics will exercise its rights under such agreements for the benefit of Salix and as reasonably
requested by Salix. In the event of any assignment to Salix under this Section 5.2(d), Salix shall assume full responsibility for
satisfying all obligations of Progenics under any assigned agreement to the extent arising after such assignment and
assumption. Notwithstanding any of the foregoing provisions of this Section 5.2(d), Progenics shall not be obligated to take
assumption. Notwithstanding any of the foregoing provisions of this Section 5.2(d), Progenics shall not be obligated to take
or permit to be taken any action which would, in the reasonable judgment of Progenics, be likely to result in a breach of any
such supply agreements.
5.3. Marketing Materials and Corporate Branding. Subject to Section 7.5, Salix shall be solely responsible at its expense
for all pre-marketing and marketing efforts and for creating all packaging and Promotional Materials for the Products in the Field
in the Territory. Salix shall own all copyrights in such Promotional Materials. Subject to Progenics’s reasonable approval of the
form and presentation thereof, the corporate name and logo of Progenics shall appear on all Product packaging, package inserts
and Promotional Materials Manufactured, distributed or sold by Salix, its Affiliates and Sublicensees hereunder or pursuant
hereto, subject, in each case, to compliance with Applicable Law and regulatory requirements.
5.4. Sharing of Information. Salix shall provide the JSC with a copy of Salix’s Commercialization Plan for any Product and
any updates thereof, including information regarding [*] and [*] of the Product, [*] and [*]. Such updates shall be provided by
Salix to the JDC as and when such reports are produced by or made available to Salix for its internal use. Salix shall report to the
JSC at each meeting thereof and at such other times as appropriate on the progress of its implementation of the
Commercialization Plan. All commercial information so disclosed by Salix shall be Salix’s Confidential Information for the
purposes of Section 8.2.
5.5. Unauthorized Sales .
(a) Unauthorized Sales by Salix. Salix (i) shall, and shall cause its Affiliates and Sublicensees to, distribute, market,
promote, offer for sale and sell Products only in the Field in the Territory and (ii) shall not, shall not permit its Affiliates to,
and shall make reasonable efforts to cause its Sublicensees not to, distribute, market, promote, offer for sale or sell Products
(A) to any Person in fields of use and countries other than those as specified in the preceding clause (i) or (B) to any Person
in the fields of use and countries as specified in the preceding clause (i) that Salix, its Affiliates or Sublicensees, as
applicable,
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
43
knows (y) is likely to distribute, market, promote, offer for sale or sell Products in fields of use and countries other than those
as specified in the preceding clause (i) or assist another Person to do so, or (z) has directly or indirectly distributed, marketed,
promoted, offered for sale or sold Products in fields of use and countries other than those as specified in the preceding
clause (i) or assisted another Person to do so. If Salix or its Affiliates receives any orders for Products for fields of use and
countries other than those specified in clause (i) of the first sentence of this Section 5.5(a), it shall promptly refer such orders
to Progenics, and Salix shall make reasonable efforts to cause any Sublicensee that receives such an order to refer such order
to Progenics. In addition, neither Salix nor its Affiliates shall sell or otherwise provide, directly or indirectly, Products to any
Sublicensee or distributor in excess of amounts reasonably required to meet local demand in the country or other territory in
respect of which the Sublicensee or distributor is authorized to distribute, market, promote, offer for sale or sell Products, and
Salix shall make reasonable efforts to prevent its Sublicensees from doing the same.
(b) Unauthorized Sales by Progenics. Progenics shall, and shall cause its Affiliates to, distribute, market, promote,
offer for sale and sell Products only outside the Territory or for use outside the Field. Progenics shall not, and shall not
permit its Affiliates to, distribute, market, promote, offer for sale or sell Products (i) to any Person other than outside the
Territory or for use outside the Field or (ii) to any Person that Progenics or its Affiliates, as applicable, knows (A) is likely to
distribute, market, promote, offer for sale or sell Products for use in the Field in the Territory or assist another Person to do
so, or (B) has directly or indirectly distributed, marketed, promoted, offered for sale or sold Products for use in the Field in the
Territory or assisted another Person to do so. If Progenics or its Affiliates receives any orders for Products for use in the
Field in the Territory, it shall promptly refer such orders to Salix. In addition, neither Progenics nor its Affiliates shall sell or
otherwise provide, directly or indirectly, Products to any licensee or distributor in excess of amounts reasonably required to
meet local demand in the country or other territory in respect of which the licensee or distributor is authorized to distribute,
market, promote, offer for sale or sell Products.
(c) Certain Limitations. The provisions of this Section 5.5 shall apply only to the extent permitted by Applicable
Law. To the extent any provision of this Section 5.5 shall be found in any jurisdiction to be in violation of public policy or
illegal or unenforceable in law or equity, the provisions of Section 13.5 shall apply.
6. PAYMENTS BY SALIX TO PROGENICS
6.1. Upfront License Fee Payment. Salix shall pay to Progenics upon the execution of this Agreement sixty million dollars
($60,000,000) as a one-time, nonrefundable and noncreditable license fee in partial consideration for the licenses granted under
Section 2.1 hereof. Such amount shall be paid within five (5) Business Days after receipt by Salix of an invoice from Progenics.
44
6.2. Development Milestone Payments.
(a) In partial consideration for the licenses granted to Salix under Section 2.1 hereof, Salix shall pay to Progenics
upon the satisfaction of the specified conditions the following one-time, nonrefundable, and noncreditable payments (“
Development Milestone Payments ”) within five (5) Business Days of receipt by Salix of an invoice for the payment of the
applicable Development Milestone Payment as set forth in this Section 6.2. Each Development Milestone Payment is payable
one time only, regardless of the number of Products or indications for which the condition is satisfied. For the avoidance of
doubt, the maximum aggregate value of all Development Milestone Payments is ninety million dollars ($90,000,000).
Condition Payment
[*] $ [*], [*]
[*] $ [*], [*]
(b) In the event that the specified condition for the Development Milestone Payment in respect of the [*] as
(b) In the event that the specified condition for the Development Milestone Payment in respect of the [*] as
specified above is achieved [*].
(c) In the event that the specified condition for the Development Milestone Payment in respect of the [*] as
specified above is achieved [*].
6.3. Commercialization Milestone Payments. In partial consideration for the licenses granted to Salix under Section 2.1
hereof, Salix shall pay to Progenics upon the satisfaction of the specified conditions the following one-time, nonrefundable, and
noncreditable payments (“ Commercialization Milestone Payments ”) within [*] ([*]) Business Days of receipt by Salix of an
invoice for the payment of the applicable Commercialization Milestone Payment. Each Commercialization Milestone Payment is
payable one time only, regardless of the number of times the condition is satisfied. For the avoidance of doubt, the maximum
aggregate value of all Commercialization Milestone Payments is two hundred million dollars ($200,000,000), and up to all six
(6) payments could be made with respect to a single Calendar Year.
Condition Payment
[*] $ [* 1 ]
[*] $ [*]
[*] $ [*]
[*] $ [*]
[*] $ [*]
[*] $ [*]
1
For the avoidance of doubt and by way of example, the Commercialization Milestone Payment for the [*].
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
45
6.4. Ex-U.S. Sublicenses and Sales .
(a) When Salix enters into arrangements with one or more Sublicensees relating to any area outside the United
States, Salix shall pay Progenics sixty percent (60%) of all Sublicense Revenues pursuant to any such arrangements.
(b) All payments under this Section 6.4 shall be payable within [*] ([*]) days after receipt of the applicable
Sublicense Revenue by Salix.
(c) For the avoidance of doubt, Section 6.4(a) shall not apply to any sales or other Commercialization of Products
by Salix or its Affiliates, whether inside or outside the United States.
6.5. Royalty Payments.
(a) Royalties. In partial consideration for the licenses granted to Salix under Section 2.1, Salix shall pay to Progenics
royalties in the amount of the applicable Net Sales percentage (as set forth below) (the “ Applicable Net Sales Percentage ”)
of the Net Sales made during the Royalty Period by Salix and its Affiliates, whether inside or outside the United States, as
follows:
Applicable
Net Sales
Combined Net Sales of All Products by Salix and its Affiliates Percentage
[*] [*]%
[*] [*]%
[*] [*]%
(b) Royalty Period .
(i) The royalties payable under Section 6.5(a) shall be payable by Salix only during the Royalty Period in
respect of the relevant Product and country.
(ii) Following the expiration of the Royalty Period in respect of a Product in a country in the Territory, the
license grants to Salix in Section 2.1 in respect of such Product shall, in accordance with Section 2.8, become fully paid-up,
perpetual and irrevocable with respect to such Product and such country and accordingly the Net Sales of the relevant
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
46
Product in such country shall be excluded from the royalty calculations for purposes of Section 6.5(a) and from calculations of
thresholds for Commercialization Milestone Payments for purposes of Section 6.3.
(c) Adjustment of Royalties . If at any time the Royalty Period is continuing solely because of clause (c) of the
definition thereof for a particular Product in a particular country, then the dollar amount of royalties payable in respect of Net
Sales of such Product in such country thereafter during the Royalty Period pursuant to Section 6.5(a) shall be reduced by [*]
percent ([*]%) from the amount which would have been so payable under this Agreement in the absence of this clause (c).
(d) Progenics Third Party Agreements; Third Party Licenses.
(i) Except as otherwise provided in or contemplated by Section 4.6, Progenics shall, as between the Parties, be
solely responsible for all obligations under each Progenics Third Party Agreement unless and until such Progenics Third Party
Agreement is assigned to Salix pursuant to Section 4.6(d) or 9.4(d). In the event that a Progenics Party or any of its Affiliates
fails to pay any amount that it is obligated to pay in respect of a Progenics Third Party Agreement pursuant to the preceding
sentence and Salix makes such payment on behalf of such Progenics Party, then Salix shall be entitled to credit such amount
against any amount owed by Salix to Progenics under this Agreement. Except as otherwise provided herein, Salix shall, as
between the Parties, be solely responsible in respect of all Progenics Third Party Agreements assigned to Salix pursuant to
Sections 4.6(d) and 9.4(d) for any and all obligations arising under such Progenics Third Party Agreements from and after the
date of assignment. In the event that Salix or any of its Affiliates fails to pay any amount that it is obligated to pay in respect of
a Progenics Third Party Agreement pursuant to the preceding sentence and Progenics or one of its Affiliates makes such
payment on behalf of Salix or such Affiliate, then Salix shall promptly reimburse Progenics for the amount paid.
(ii) If, during the Term, Salix or its Affiliates, whether pursuant to Section 7.4(b) or otherwise, enters into an
agreement with a Third Party to license Patent Rights as to which, [*], there is [*] (a “ Third Party License ”), then Salix may
deduct up to [*] percent ([*]%) of the royalties or other payments payable pursuant to such Third Party License actually paid
by Salix or its Affiliates to such Third Party pursuant to the Third Party License from the royalties otherwise due from Salix to
Progenics in respect of Net Sales of the relevant Product(s) under Section 6.5(a) as adjusted pursuant to Section 6.5(c), up to a
maximum amount in respect of the relevant Net Sales for any Quarter that would result in Progenics’s effective royalty rate in
respect of such Net Sales in such Quarter under Section 6.5(a) as adjusted pursuant to Section 6.5(c) for such Product(s) being
reduced by not more than [*] ([*]) percentage points, with any balance then remaining to be carried over to amounts owed by
Salix to Progenics pursuant to Section 6.5(a) in respect of subsequent Quarters and applied against the amounts owed by Salix
to Progenics pursuant to Section 6.5(a) as adjusted pursuant to Section 6.5(c) in respect of such subsequent Quarters, up to a
maximum amount for each Quarter that would result in Progenics’s
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
47
effective royalty rate in respect of each such Quarter under Section 6.5(a) for such Product(s) as adjusted pursuant to
Section 6.5(c) being reduced by not more than [*] ([*]) percentage points. By way of example, if the royalty rate applicable in
respect of the relevant Quarter was [*] percent ([*]%), then the maximum amount in respect of amounts paid by Salix to the
Third Party in respect of the Third Party License that could be deducted from royalties on relevant Net Sales otherwise owed by
Salix to Progenics for such Quarter would be an amount that would reduce Progenics’s effective royalty rate for the Quarter for
the relevant Product(s) to [*] percent ([*]%).
(e) Disclaimers . Each Party acknowledges and agrees that nothing in this Agreement (including, without
(e) Disclaimers . Each Party acknowledges and agrees that nothing in this Agreement (including, without
limitation, any exhibits or attachments hereto) shall be construed as representing an estimate or projection of either (i) the
number of Products that will or may be successfully Developed or Commercialized or (ii) anticipated sales or the actual value
of any Product. SALIX MAKES NO REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, THAT IT WILL
BE ABLE TO SUCCESSFULLY DEVELOP OR COMMERCIALIZE ANY PRODUCT OR, IF COMMERCIALIZED, THAT ANY
SUCH PRODUCT WILL ACHIEVE ANY PARTICULAR SALES LEVEL, OR THAT, EXCEPT AS EXPRESSLY AGREED IN
THIS AGREEMENT, IT WILL DEVOTE ANY LEVEL OF DILIGENCE OR RESOURCES TO COMMERCIALIZING ANY SUCH
PRODUCT.
6.6. Reports, Payments and Related Matters.
(a) Cumulative Royalties. The obligation to pay royalties under this Agreement shall be imposed only once with
respect to any sale of any Product, regardless of the number of patents that may cover the Product.
(b) Reports and Payments. Within [*] ([*]) days after the first day of each Quarter following the First Commercial
Sale of a Product in the Territory, Salix shall submit to Progenics a written report with respect to the preceding Quarter (the “
Quarterly Activity Report ”) stating: (i) the gross sales and Net Sales of Products sold by Salix and its Affiliates and any
Sublicensee during the Quarter just ended for each country in which sales were made, making reference to the specific
deductions taken in accordance with the definition of Net Sales; (ii) the date of any First Commercial Sale of any Product in a
deductions taken in accordance with the definition of Net Sales; (ii) the date of any First Commercial Sale of any Product in a
country in the Territory during the Quarter just ended; (iii) the currency exchange rates used in determining gross sales, Net
Sales and amounts payable under Section 6.5; and (iv) a calculation of the amounts due to Progenics pursuant to Section 6.5
in respect of the Quarter just ended. All royalty payments due under Section 6.5 shall be due and payable within [*] ([*])
Business Days following the distribution of each Quarterly Activity Report. Salix shall submit to Progenics with each
payment under Section 6.4 a written report with respect to such payment (a “ Sublicense Revenue Report ”) describing in
detail the Sublicense Revenue to which such payment relates and providing such other information specified above for
inclusion in a Quarterly Activity Report as may be relevant thereto. The obligation of Salix
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
48
to provide Quarterly Activity Reports and Sublicense Revenue Reports under this Section 6.6(b) shall cease to apply once
Salix has no further obligation to make payments of, respectively, royalties under Section 6.5 or payments under Section 6.4.
(c) Taxes and Withholding. All payments under this Agreement will be made without any deduction or withholding
for or on account of any tax, duties, levies, or other charges unless such deduction or withholding is required by Applicable
Law to be assessed against Progenics. If Salix is so required to make any deduction or withholding from payments due to
Progenics, Salix will (i) promptly notify Progenics of such requirement, (ii) pay to the relevant authorities on Progenics’s
behalf the full amount required to be deducted or withheld promptly upon the earlier of determining that such deduction or
withholding is required or receiving notice that such amount has been assessed against Progenics, and (iii) promptly forward
to Progenics an official receipt (or certified copy) or other documentation reasonably acceptable to Progenics evidencing
such payment to such authorities.
(d) Currency. All payments under this Agreement shall be made in dollars. As applicable, Sublicense Revenue, Net
Sales and any royalty deductions shall be translated into dollars at the exchange rate used by Salix for public financial
accounting purposes in accordance with GAAP.
accounting purposes in accordance with GAAP.
(e) Record Keeping. Salix shall keep, and shall cause its Affiliates to keep, books and accounts of record in
connection with Sublicense Revenue and the sale of Products in accordance with GAAP and in sufficient detail to permit
accurate determination of all figures necessary for verification of Sublicense Revenue to be shared by Salix with Progenics
under Section 6.4(a) and royalties to be paid under Section 6.5. Salix and its Affiliates shall maintain such records for a period
of at least [*] ([*]) years after the end of the Quarter in which they were generated, provided, however , that if any records are
in dispute and Salix has received notice from Progenics of the records which are in dispute, Salix shall keep such records until
the dispute is resolved.
(f) Audits.
(i) Examination of Books and Records . Upon [*] ([*]) days’ prior notice from Progenics, Salix shall permit an
independent certified public accounting firm, of nationally recognized standing selected by Progenics and reasonably
acceptable to Salix, to examine, at Progenics’s sole expense, the relevant books and records of Salix and its Affiliates, and shall
take reasonable efforts to cause its Sublicensees to permit Progenics to examine the relevant books and records of
Sublicensees, in each case as may be reasonably necessary to verify the amounts reported by Salix in accordance with
Section 6.6(b) and the sharing of Sublicense Revenue under Section 6.4(a) and payment of royalties under Section 6.5 and its
compliance with its other Development and Commercialization obligations hereunder. An examination by Progenics under this
Section 6.6(f) shall occur not more than [*] in any [*] and
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
49
shall be limited to the pertinent books and records for any [*] ending not more than [*] ([*]) months before the date of the
request. The accounting firm shall be provided access to such books and records at Salix’s and other relevant facilit(y/ies)
where such books and records are normally kept and such examination shall be conducted during normal business hours. Salix
may require the accounting firm to sign a standard non-disclosure agreement before providing the accounting firm with access
may require the accounting firm to sign a standard non-disclosure agreement before providing the accounting firm with access
to relevant facilities or records. Upon completion of the audit, the accounting firm shall, subject to Section 6.6(g), provide both
Salix and Progenics with a written report disclosing any discrepancies in the reports submitted by Salix or the Sublicense
Revenue shared or the royalties paid, and, in each case, the specific details concerning any discrepancies.
(ii) Underpayments/Overpayments. If such accounting firm concludes that additional portions of Sublicense
Revenue were due to Progenics under Section 6.4(a) or additional royalties were due to Progenics under Section 6.5(a), Salix
shall pay to Progenics the additional Sublicense Revenue or royalties, as the case may be, within [*] ([*]) days of the date Salix
shall pay to Progenics the additional Sublicense Revenue or royalties, as the case may be, within [*] ([*]) days of the date Salix
receives such accountant’s written report, plus interest, which shall be calculated at the average of the prime rate reported by
JPMorgan Chase, New York City, each month during the period beginning on the day the unpaid amount was due until the
unpaid amount is paid in full, plus [*] percent ([*]%) per annum. If such underpayment exceeds the greater of [*] dollars ($[*])
and [*] percent ([*]%) of the aggregate share of Sublicense Revenue and royalties that were to be paid by Salix to Progenics for
the audited period, Salix also shall reimburse Progenics for the out-of-pocket expenses incurred in conducting the audit.
Progenics shall not reveal to such accounting firm the conditions under which the audit expenses are to be reimbursed
hereunder. If such accounting firm concludes that Salix overpaid Sublicense Revenue or royalties to Progenics, Progenics will
hereunder. If such accounting firm concludes that Salix overpaid Sublicense Revenue or royalties to Progenics, Progenics will
refund such overpayments to Salix within [*] ([*]) days of the date Progenics receives such accountant’s report. [*] interest
shall be due to Salix on any such overpayment.
(g) Confidentiality. All progress reports and financial information of Salix subject to review under this Article 6
shall be deemed to be Salix’s Confidential Information subject to the provisions of Article 8 hereof, and Progenics shall not
disclose such Confidential Information to any Third Party or use such Confidential Information for any purpose other than
reviewing progress made or verifying payments to be made by Salix to Progenics under this Agreement; provided, however ,
that such Confidential Information may be disclosed by Progenics to Third Parties only to the extent necessary to enforce
Progenics’s rights under this Agreement.
6.7. Diagnostic or Veterinary Products . Notwithstanding anything to the contrary in this Article 6, sales of Products for
diagnostic (including screening or monitoring) or veterinary use shall not be considered Net Sales for purposes of Section 6.3 or
6.5 or Sublicense Revenues for purposes of Section 6.4. In the event that Salix Develops or seeks to Sublicense Development of
any Product for any such use, then the Expanded Parties shall negotiate in good faith to agree upon, as a condition to Salix’s
right to Commercialize (whether itself or through a Sublicensee) such Product, appropriate compensation to be paid by Salix to
Progenics in connection with the Commercialization of such Product.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
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7. INTELLECTUAL PROPERTY.
7.1. Ownership of Intellectual Property.
(a) Inventorship/Authorship. For purposes of this Agreement, (i) inventorship of any invention and any Patent
Right claiming such invention shall be determined in accordance with the rules and guidelines regarding inventorship as
established under United States patent law (including case law and regulations associated therewith); and (ii) authorship of
established under United States patent law (including case law and regulations associated therewith); and (ii) authorship of
any work subject to copyright protection shall be determined in accordance with U.S. copyright law. Without limiting the
foregoing, each Expanded Party shall own all right, title and interest in and to all Patent Rights, Know-How, or copyright
materials created solely by or on behalf of such Party.
(b) Ownership of Joint Technology and Joint Copyrights. As between the Progenics Parties, on the one hand, and
Salix, on the other hand, each shall own an equal, undivided interest in any Joint Technology and any copyright materials
authored jointly by employees or agents of Progenics or any of its Affiliates and employees or agents of Salix or any of its
Affiliates.
(c) Exploitation of Joint Technology and Joint Copyrights. Except as expressly provided in this Agreement neither
(c) Exploitation of Joint Technology and Joint Copyrights. Except as expressly provided in this Agreement neither
Party shall exploit any Joint Technology inside or outside the Territory without the prior written approval of the other Party.
Neither Party shall exploit any copyright materials authored jointly by employees or agents of Progenics or any of its
Affiliates and employees or agents of Salix or any of its Affiliates without the prior written approval of the other Party except
in connection with the Manufacturing, Development or Commercialization of the Compound and Products in the Territory as
contemplated hereby.
7.2. Patent Prosecution.
(a) Progenics Patent Rights, Wyeth Collaboration Patent Rights, Wyeth Collaboration Joint Patent Rights and
(a) Progenics Patent Rights, Wyeth Collaboration Patent Rights, Wyeth Collaboration Joint Patent Rights and
Ono Collaboration Joint Patent Rights. Using counsel selected by Salix after good faith consultation with Progenics [*],
Salix shall use Commercially Reasonable Efforts to prepare, file, prosecute and maintain, at Salix’s expense, the Progenics
Patent Rights as to which Progenics has the right to control prosecution and maintenance, Wyeth Collaboration Patent
Rights, Wyeth Collaboration Joint Patent Rights and Ono Collaboration Joint Patent Rights (including provoking, instituting
or defending interference, opposition, revocation, reexamination and similar proceedings related to the Progenics Patent
Rights as to which Progenics has the right to control prosecution and maintenance, Wyeth Collaboration Patent Rights,
Wyeth Collaboration Joint Patent Rights
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
51
and Ono Collaboration Joint Patent Rights) in all countries in the Territory where such Patent Rights are currently pending
and, respecting the [*]. In respect to any Progenics Patent Rights as to which Progenics does not have the right to control
prosecution and maintenance of such Patent Rights, Progenics (i) shall ensure that Salix is promptly provided with all such
information as Progenics may receive in respect of the prosecution and maintenance of such Patent Rights and with a full
opportunity to participate in any consultations that may take place between Progenics and any Third Party holding the right
to pursue prosecution and maintenance of such Patent Rights and (ii) shall exercise such rights as it does have in respect of
the prosecution and maintenance of such Patent Rights in accordance with Salix’s directions. The Parties shall cause their
respective patent counsel to communicate no less frequently than [*] per [*] regarding the prosecution and maintenance of
the Progenics Patent Rights, Wyeth Collaboration Patent Rights, Wyeth Collaboration Joint Patent Rights and Ono
Collaboration Joint Patent Rights. Without limiting the generality of the foregoing, Salix shall provide to Progenics copies of
all communications sent to and received from any patent office pertaining to Progenics Patent Rights, Wyeth Collaboration
Patent Rights, Wyeth Collaboration Joint Patent Rights or Ono Collaboration Joint Patent Rights, including [*]. Whenever
possible, Progenics shall be given at least [*] ([*]) Business Days prior to the earlier of the expiration of any shortened
possible, Progenics shall be given at least [*] ([*]) Business Days prior to the earlier of the expiration of any shortened
statutory period for response or anticipated filing to review and comment upon the text of any such communication. Salix
shall also keep Progenics advised on the maintenance of any patents included within the Progenics Patent Rights, Wyeth
Collaboration Patent Rights, Wyeth Collaboration Joint Patent Rights and Ono Collaboration Joint Patent Rights and provide
Progenics with reasonable opportunity to comment on maintenance. In the event that the Parties’ respective patent counsel,
after good faith discussions, cannot agree with respect to any decision to be made with respect to the preparation, filing,
prosecution and maintenance of the Progenics Patent Rights, Wyeth Collaboration Patent Rights, Wyeth Collaboration Joint
Patent Rights or Ono Collaboration Joint Patent Rights (including decisions relating to [*]), Salix shall make such decision.
(b) Ono Collaboration Patent Rights. Progenics shall provide to Salix, promptly following its receipt of the same
from Ono pursuant to Section 7.2.3 of the Ono Agreement, copies of all communications (and English translations or English
summaries thereof, as provided by Ono) sent to and received from patent offices pertaining to the prosecution of Ono
summaries thereof, as provided by Ono) sent to and received from patent offices pertaining to the prosecution of Ono
Collaboration Patent Rights. Salix shall have the right to review and comment upon the text of any such communication and
Progenics shall for that purpose solicit any comments that Salix may have and include them as part of its comments to Ono.
Salix shall have the right to have its patent counsel participate in any communications between Progenics’s patent counsel
and Ono’s patent counsel that may occur pursuant to, or in conformance with, Section 7.2.3 of the Ono Agreement.
Progenics shall provide Salix with notice of any communications between its patent counsel and Ono’s patent counsel that
may be contemplated pursuant to Section 7.2.3 of the Ono Agreement. Such notice shall be provided by Progenics promptly
following its becoming aware of any such proposed communication and in a manner appropriate to provide Salix with a
reasonable opportunity
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
52
to have its patent counsel participate in any such communication. Progenics shall provide Salix, promptly following its receipt
of the same from Ono pursuant to Section 7.2.3 of the Ono Agreement, with copies of advice it receives from Ono on the
maintenance of Ono Collaboration Patent Rights and shall include in its comments to Ono any comments that Salix may have
in respect of maintenance of Ono Collaboration Patent Rights. Progenics shall promptly notify Salix of any notice that it
should receive from Ono of Ono’s election not to prepare, file, prosecute or maintain any Ono Collaboration Patent Right, and
shall thereafter pursue the preparation, filing, prosecution and maintenance of any such Ono Collaboration Patent Rights at
Salix’s direction. Progenics acknowledges that Salix shall have the right to participate in any discussions that it may have
with Ono with respect to the preparation, filing, prosecution, and maintenance of Ono Collaboration Patent Rights
contemplated by Section 7.2.3 of the Ono Agreement and shall for such purpose notify Salix of any such discussions
promptly following its becoming aware of any such proposed discussions and in a manner appropriate to provide Salix with a
promptly following its becoming aware of any such proposed discussions and in a manner appropriate to provide Salix with a
reasonable opportunity to participate therein. In no event shall Progenics consent to any action by or on behalf of Ono with
respect to the prosecution or maintenance of Ono Collaboration Patent Rights without first having obtained Salix’s consent
thereto. In the event that the Parties’ respective patent counsel, after good faith discussions, cannot agree with respect to
any decision to be made with respect to the preparation, filing, prosecution and maintenance of the Ono Collaboration Patent
Rights (including decisions relating to interference, opposition, revocation, reexamination and similar proceedings), then Salix
shall make such decision. In no event, however, shall Progenics be required to take any action that would cause Progenics to
breach any Progenics Third Party Agreement or that would, in Progenics’s judgment, be contrary to law. In the event that
pursuant to Section 2.12 Salix should succeed to all or substantially all of the rights and licenses currently held by Ono under
the Ono Agreement, then thereafter the Ono Collaboration Patent Rights shall be deemed to constitute Progenics Patent
Rights and, except as may be otherwise required by any ongoing provisions of the Ono Agreement, the prosecution and
maintenance thereof shall be governed by the provisions of Section 7.2(a).
(c) Joint Patent Rights. The Parties shall discuss in good faith, and thereupon implement, a mutually agreeable
patent strategy with respect to all Joint Technology that may be patentable, and shall cause their respective patent counsel
to communicate no less frequently than [*] per [*] regarding the prosecution and maintenance of the Joint Patent Rights in
the Territory and outside the Territory. With respect to all Joint Technology for which the Parties agree patent prosecution
should be sought, the Parties shall cooperate in the preparation, filing and prosecution of patent applications (including
provoking, instituting or defending interference, opposition, revocation, reexamination and similar proceedings related to the
Joint Patent Rights), and shall discuss and agree on the content and form of relevant patent applications and any other
relevant matters before such applications are made. Each Party shall consider in good faith any comments from the other
Party regarding steps to be taken to strengthen any Joint Patent Right. Salix shall serve as the lead Party to prosecute and
maintain all applications covering Joint Patent Rights in the
* Confidential treatment requested; certain information omitted and filed separately with the SEC.
53
Territory (including provoking, instituting or defending interference, opposition, revocation, reexamination and similar
proceedings related to the Joint Patent Rights), at Salix’s expense, unless otherwise agreed by the Parties. In the event that
the Parties, after good faith discussions, cannot agree with respect to any decision to be made regarding the prosecution and
maintenance of the Joint Patent Rights in the Territory (including decisions relating to interference, opposition, revocation,
reexamination and similar proceedings related to the Joint Patent Rights), then Salix shall make such decision. In all cases,
each Party shall provide reasonable assistance to the other Party, at Salix’s expense, with respect to Joint Patent Rights in the
Territory.
(d) Salix Collaboration Technology. Salix shall be solely responsible for the prosecution of the Salix Collaboration
Patent Rights and the maintenance of any patents included within the Salix Collaboration Patent Rights at Salix’s expense.
Salix shall provide to Progenics copies of all communications sent to and received from patent offices pertaining to the
prosecution of the Salix Collaboration Patent Rights including, but not limited to, [*]. Furthermore, the Parties shall cause
their respective patent counsel to communicate no less frequently than once per Quarter regarding the prosecution of the